1. Late Payment Fee
Those late payment fees are the worst. You always seem to get hit with them right around the holidays (or during the busy time at work) likely because you simply forgot to send in that check. Before you know it you’re hit with late fees and left feeling frustrated. But never fear: this fee can be easily avoided with auto-pay. Almost every bank will allow you to set this up online and you’ll never have to worry about paying late again.
2. Finance Charge
This is the interest on the balance you carry on your credit card. If you always pay off your balance on your credit card each month, you’ve probably never heard of this because you haven’t had to pay any interest on your card- lucky you!
But of course, many can’t pay always pay that card off in full right away, but you can aim to keep that balance as low as possible. Another option is to use a low-interest credit card rather than a rewards card (which tend to have higher rates).
3. Annual Fees
These are the fees you pay for the honor and privilege of carrying that piece of plastic in your wallet… and they can sound like a nightmare. “Let me get this straight,” you’re saying, “A fee just for using my card? That I’ll have to pay every year no matter what? Jeez louise.”
Yep. But here’s the thing- cards that come with an annual fee usually come with more perks, too. You usually find them on travel cards, which will usually give you nice signup bonuses and better rewards than your average cash-back cards do.
To figure out if the fancy card with the annual fee is worth it, you’ll have to roll up your sleeves and do a little math. Will you earn enough rewards each year with the cash-back card to justify getting that over the card that comes with annual fees? Or is it better to pay up those annual fees and enjoy some other perks?
Don’t be fooled by the word “fee” because this one isn’t as scary as it sounds. Remember that a card with an annual fee could end up saving you money in the long run.
4. Cash Advance Fee
You’ll pay these fees when borrowing cash against your credit card. So, if you find yourself in a bind and need cash fast, you borrow it and end up getting a fee of about 2 percent to 5 percent of the amount you borrowed. It’s nice to have that cash available to you, but the fees make it harder to pay off.
The bad news is there’s no easy fix to this fee. The only way to avoid these is to pull the money out of your savings instead. Set a goal to give yourself a little emergency fund and save yourself some money later.
5. Foreign Transaction Fees
These fees, which add 1 percent to 3 percent onto any purchases you make outside the US, are perhaps the easiest to avoid. You know when you’re going on that trip, so set yourself up for success with a travel card. Or, use your Discover or Capital One card- they don’t charge a foreign transaction fee on any of their cards.