Last week we explored annual, processing, monthly maintenance, and late payment fees. Let’s take a look at some more credit card fees.
You’ll be charged an insufficient funds fee if your credit card payment is returned. The typical charge is approximately $40.
How to Avoid: Bounced payments usually occur because of simple clerical errors, so double-check your checking account and other sources before submitting a credit card payment.
Your monthly credit card statement always displays your account’s credit limit and current outstanding balance. Occasionally, you might find yourself attempting to make a purchase that would put you over your limit. Credit cards have various policies regarding over-limit spending. Some will OK small overages, others will reject them, and some may charge an over-limit fee in either event. Once again, the cost is usually around $40.
How to Avoid: Many credit cards allow you to link a source of funds, such as a checking or savings account, to handle over-limit spending without penalty. Your card issuer might also offer a separate credit account to cover overages, but this option usually requires a monthly payment. You can avoid overages if your credit card has a mobile app that lets you check your current balance before making a purchase.
Most credit cards allow you to borrow money from your credit card, up to the cash advance limit (often lower than the overall credit limit). You can get the advance at an ATM or a bank branch. Cash advances rack up daily interest charges with an APR almost always between 20% and 36%. In addition, each transaction will charge a fee between 3% and 8% of the advance amount, usually with a $5 minimum. ATM fees may also apply.
How to Avoid: There isn’t any way to dodge this fee unless you avoid taking cash advances. Always pay your advances back as soon as possible, as they are expensive.
You can consolidate your debt by transferring balances from one or more cards to another. This can make sense if the balance transfer card charges a lower interest rate or if you’d like to avoid making payments to multiple credit cards each month. Some cards offer new cardholders a 0% introductory balance transfer APR for 6 to 21 months. The transaction fee is typically the same as that for cash advances.
How to Avoid: A very few credit cards waive the fee if you aren’t taking advantage of a 0% APR offer. But otherwise, the fee is unavoidable.