When you get a credit card, watch out for those junk fees. They’re all in the fine print, but most people don’t even look at them. These fees can cause your credit card debt to balloon out of control, making it more likely you will fall behind on your bill payment.
Here are the top 5 credit card junk fees to watch out for:
- The late fee. Banks charge as much as $39 (on top of finance charges) if your payment doesn’t arrive on time. If you’re prone to forgetting, schedule automatic payments through your bank. If it’s only happened once or twice, talk to your creditor. They might just waive the fee.
- The balance-transfer fee. Many cards will advertise low APRs on balance transfers to entice customers, but the transfer fee could negate the advantages. The good news is that some cards don’t have them — Capital One, for example, has no balance-transfer fees on most cards.
- The cash-advance fee. Use your credit card to get cash from an ATM, and you’re actually taking out a loan — probably with a very high interest rate. But you may also have to pay a transaction fee both to your credit-card company and to the bank that owns the ATM you use. All in all, it’s not worth it. Best to avoid cash advances altogether.
- The over-limit fee. Exceed the limit on your credit card and you may have to fork over another $39. Wait — doesn’t that undermine the point of a credit limit? Perhaps, but some companies will OK the over-charge as a “convenience” for you. (But wouldn’t it be more convenient if they just raised your credit limit?) You may want to explicitly let your credit-card company know not to let you charge more than your limit.
- The foreign-currency fee. If you use your card abroad, you’re going to have to pay a hefty fee — typically around 3% of your purchase — so stick with traveler’s checks. If you must use a card, look for one with no fee or low rate before you travel.
Source for post: MarketWatch.
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