Even though it’s better to use debit cards (only swipe it at authorised stores) or liquid cash for day-to-day transactions, still that’s not always possible. To be honest, credit cards are the most convenient way to pay for our purchases and nothing else can take its place!
But there’s one big problem with credit cards, which is credit card charges!
These charges are a menace. Interests on balance, penalty fees, subscription fees, transfer fees and many more that you just can’t follow up with!
So, in this post, I will be breaking down the charges usually a credit card holder has to pay.
Practical credit card charges (those that anyone can easily understand):
1 Interest charges:
This is inevitable and it’s same for every single credit card holder.
If you are borrowing credit, then you will have to pay charges.
But yes, there are many ways you can evade or lower extra payments on credit card interests.
Always try to maintain a good credit score and profile to qualify for credit cards with lower interest rates.
You should also avoid going late on payments, as the more you are late, more charges you will have to pay!
2 Cash advance fees:
These fees you will have to pay if you withdraw money from ATMs or banks using your credit cards.
If you ask why do you have to pay such fees, then my answer will be “it is the regulation”!
So, whenever you need to withdraw money from ATMs, try to use your debit cards.
3 Balance transfer fees:
Many people have come across this term called “balance transfer” as an option to fight credit card debts!
The credit card companies will definitely charge you a certain amount when you transfer your balances from one card to another!
If you are doing a balance transfer for managing your debts, then try to get an introductory rate for your new credit card where interest rate for the first few months will be 0%.
4 Foreign transaction fees:
This is an international rule that every bank has to follow in every country.
In the US, the charges are typically 3% of the total transaction! But that doesn’t mean it’s pretty low.
If you do frequent traveling and foreign transactions, then keep your purchases in check. More transactions you do, more will be the charges!
5 Annual fees:
You have to pay some charges if you want to keep your credit card account open.
As per my knowledge, this falls as a mandatory charge.
But, if you have a talk with your servicer, then they can forgive the annual fees!
Even though the chances of getting your annual charges canceled are thin, you can still try it out once for your benefit!
6 Late payment fees:
Whenever you default on your credit card payments, you are charged a penalty fee!
If you keep on delaying, the interest rate on the balance will also increase!
All these fall under late payment fees.
The only mantra to avoid this hectic charge is “never be due on payments”!
7 Over-limit fees:
Whenever a credit card user maxes out a card, an over-limit fee will be charged on every future transaction.
The only way you can prevent this from happening is by always staying within your credit limits!
Impractical credit card fees / hidden charges (Those that are difficult to understand):
1 Phantom charges:
Sometimes we receive offers and interesting packages marketed to us by some third-party servicer, as free!
But little do we take notice of the end of the trial period, taxes, or other fees associated with it.
So, before you purchase any such package, do a thorough research!
2 Zombie charges:
Suppose you made a subscription that enables a special feature for your credit card.
But now you are not interested and canceled the subscription.
Even though you have unregistered, you still see that you are charged for that subscription every month. This is what we call zombie charges!
The only way to avoid these instances is by having a talk with your bank or credit card servicer!
3 Luxury charges:
Whenever you purchase any add-on benefit from your servicer, you will be definitely charged some fees.
These are like purchasing a new year package that gives 10% discount on movie tickets for three months.
All these facilities are chargeable and you should be wise in making your discussions, as this way the banks and lenders make a huge profit. It’s just a marketing strategy to allure you with bonus points or gift rewards!
4 Free to paid charges:
Many people have encountered such fees, but are unable to understand them at the first glance.
These charges might look like phantom charges.
Suppose you purchased a credit card feature when it was offered for free, but now you are not aware of the fact that it has become chargeable!
So, always pay attention to the charges that come along with an extra feature, which looks appealing!
5 Unintended subscriptions:
It’s just as the name suggests; it’s unintentional!
Many of us receive several SMS from our service providers about offers and exciting packages. To activate those, all we just need to do is press a button or send them back a reply!
These activities could be costly and must be careful!
6 Returned payment fees:
This is a very rare case, but happens!
Nowadays, people usually don’t make payments with checks or drafts!
So, when a cheque bounces and your payment gets delayed, then you might be charged this specific fee!
Also, if a payment transaction is interrupted due to network or service issues, then you might be charged a returned payment fees!
Hence look out for these problems from now on!
7 Wage garnishments:
This happens maximum with business credit cards, where transactions take place on a frequent basis!
If the lender finds out that you are not regular on payment or are defaulting at a huge rate, then you can be sued, which can result in wage garnishments!
Beware of such problems.
If anything takes place as such, then have a talk with your lender or servicer!
