Avoid Sneaky Credit Card Charges

Credit cards can be a useful tool for managing your budget and making larger investments, although you can easily end up spending much more than you bargained for. The extra cash you end up owing can come from a slew of sneaky credit card charges that credit card companies tack on for a number of items you may not have even considered. We here at PaydayLoansCashAdvance want to help you consider them so you can avoid them whenever possible.

Annual Fee

Annual fees are often a part of the deal for many credit card companies, although others don’t charge them at all. This is a fee you are charged every year just for having a credit card account, whether you end up using the card or not. Other sneaky names for this charge include membership fee and participation fee. Certain credit card companies will charge this fee once a year while others will break it down into 12 separate payments, tacking on a monthly fee to your bill every 30 days.

Application Fee

Filling out a form for a new credit card could cost you, regardless of whether or not you move forward and actually obtain the card. This fee may be added to your initial bill, although it may be charged in advance of receiving your card.

Set-up Fee

Similar to a form fee, the set-up fee is charged simply for setting up your account. It applies even before you make your first transaction with the card and applies whether or not you make any transactions with the card in the future. It’s yours to pay just for setting up an account.

Transaction Fees

While you may not note any additional fees on top of finance charges when you make a standard purchase with your credit card, you may notice fees charged for other transactions. Getting a cash advance from your credit card account often merits a fee, which can come in the form of a flat fee for each transaction or a fee calculated from a percentage of the overall amount of the advance. If your cash advance fee weighs in at 3 percent, for example, you’d be charged $30 if you received a cash advance of $1,000. Don’t forget the ATM fee that is often part of a cash advance.

Purchases or other transactions involving foreign currency often include a fee if they involve a rate conversion between foreign currency and American dollars. If you’re transferring a balance owed from one credit card to another, you may also find yourself facing a balance-transfer fee. The amount of the fee can once again be a flat rate or based on a percentage of the overall amount transferred.

Penalty Fees

Penalty fees are another large category of fees, and credit cards can enforce them for various types of behavior that violate your contract. This reinforces your need to read all the fine print or your credit card agreement very carefully before signing on the proverbial dotted line. One of the most common penalty fees is the late payment fee, which is typically enforced when you don’t pay your bill by the due date.

You could incur an additional fee if you don’t pay the minimal amount due by the due date or if you go above your credit limit. Unless you authorize the credit card company to allow charges to go over your limit, you won’t have to pay this fee since any purchases that exceed your limit will most likely be rejected.

Fees Surrounding Your Credit Limit

Exceeding your credit limit is not the only time your credit limit could incur additional fees. Some credit card companies may tack on a fee if you request and receive a credit limit increase. As you may expect, the credit card charges in this case would be dubbed a credit-limit-increase fee.

Selective Payments

Even if you’re careful about paying off balances due in a timely manner, credit card companies may engage in what is called selective payments. This means they can select what purchases they use your payment to credit, with the option of choosing to pay off smaller purchases with lower interest rates, leaving purchases with higher interest rates unpaid.

Those higher interest rates can eventually end up costing you more over the long run, again resulting in a sneaky way to have you pay more money. Ask your credit card company what type of practices they use and, if they mention selective payments, inquire if there’s a way you can specify what items are paid off first with your payments.

Other Fees

A couple of other credit card charges could pop up if you lose your card or make a phone payment. A card replacement fee is not uncommon for requesting a new card. Paying your bill by phone may also incur a fee that you would not have to pay if you take care of your bill via check or online.

Fee Protection

Being knowledgeable about possible credit card charges is an effective way to avoid them, and the federal government has additional safeguards in place to protect you from extensive fees. Federal law dictates that credit card companies cannot charge more than 25 percent of your credit limit in fees for the first year your account is open.

That means if you obtain a new card with a total credit limit of $10,000, the maximum amount you can be charged in fees that first year is $2,500. While that may seem like a lot of money, it can still be a lot less than credit card companies may otherwise try to charge, especially on cards with high limits and a high amount of activity.

Keep in mind that every purchase or transaction you make could possibly be subject to a fee if you don’t pay it off in a timely manner, otherwise violate any conditions in your card agreement or don’t keep an eye on selective payment options. Staying on top of the payments and aware of potential charges can save you a bundle in the long run.

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