Credit cards are a great financial tool that everyone should have in their back pocket. They can enable you to afford a larger purchase and pay it off over time, help you earn reward points and cash back, and offer you purchase protection for the things you buy with the card. And that’s just for starters.
However, there are some things to watch out for if you’re using a credit card. Chief among them is getting charged fees for things like accidentally going over your credit limit or making a payment a little bit late. Here are three fees to watch out for, so you never end up paying them:
Over limit charges. The first, and easiest, way to avoid this fee is not to go over your credit limit. But sometimes that’s easier said than done. Sometimes we all lose track of how much we’ve spent, or how much our credit limit is. Especially if your credit limit is low, you may have trouble staying under it. One thing to keep in mind is that you really should not spend more than 30% of your credit limit, if you want to maintain the best possible credit score. That means if your credit limit is $3,000, try to keep your balance under $900. Check your balance online using account center tools, or set up alerts to let you know when your balance goes over that amount.
However, if you do accidentally go over your limit, you should know that there are cards that don’t charge an over limit fee. And even if your card issuer does charge a fee, you can usually call them and ask that it be waived, if it’s your first time going over the limit.
Late payment charges. This is another one that you can avoid simply by making sure you pay on time. Set up automatic payments so the minimum is always paid by the due date. If you miss a payment once, call and ask for the fee to be waived. Often, if you are a good customer, your credit card issuing bank will do this for you. But again, there are some credit cards that no longer charge any late payment fee. If you have trouble making payments on time, you can look into one of those cards. Even they might charge a fee the second or third time you make a late payment, however, so be aware that you should still always try to pay on time. This impacts your credit score in a big way, so do your best to make those monthly payments before they are due.
Foreign transaction fees. If you’re a frequent overseas traveler, you are probably familiar with this fee. It’s the charge your credit card slaps you with when you purchase sometime in another country, and it’s usually around 2% or 3%. This may not sound like a lot, but it can add up on an international trip, and why pay a fee if you don’t have to? There are many great travel credit cards that don’t charge any foreign transaction fees at all. If you plan to travel abroad, you should apply for one well before your departure date.