Americans love their credit cards, but they don’t like the fees attached to those credit cards.
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According to a 2019 Consumer Reports study of 2,057 U.S. adults, more than 33 percent of American credit card consumers said they “experienced an unexpected” credit card fee. A separate study by CreditCards.com cites 438 potential fees linked to 100 credit cards it surveyed.
High fees are one reason why so Americans have trouble paying their credit card debt.
Just 30 percent of credit card owners had paid their total monthly bill in a recent six-month period, according to CompareCard.com’s Credit Card Confidence Index, while 21 percent haven’t paid down their credit card debt in full over the past six months.
How to avoid paying credit card fees
How can credit card consumers improve their credit card experience by curbing – or even eliminating – credit card fees?
It’s not an easy task, financial experts say – but it is doable.
"There are many fees associated with having a credit card, and these fees are only increasing every year," said Robert Farrington, owner of San Diego, Calif.-based personal finance website The College Investor. "There are annual fees, late fees, over-limit fees, balance transfer fees, and more. There can also be hidden fees that the credit card companies don’t tell you explicitly about."
The good news? Getting a better grip on credit card fees doesn’t have to be an uphill climb – if you absorb the following advice from credit card experts.
Start with the fine print. Thoroughly reviewing your credit contract may be a grind, but it’s worth it if you’re serious about cutting credit card costs. “All of these fees are detailed in the terms and conditions of the card, so read the fine print carefully,” Farrington said.
Pay your monthly bill on time. Ask a financial expert about their opinion for the most onerous credit card fee and you’ll get an earful about late fees. “The worst fee is a late fee because it is 100 percent avoidable,” said Michael Foguth, founder of Foguth Financial Group, in Brighton, Mich.
The easiest way to avoid paying late fees is to set your account up on auto-pay every month for at least the minimum payment, Foguth noted.
“It’s worth talking to your card provider if you pay your card late. If you do have a late fee, typically the credit card company will waive one to two late fees every 12 months,” he added.
Grease the skids in this scenario and ask your card provider to waive the fee, Foguth advised.
Interest charges. The interest fee is the monthly charge that’s triggered when you have a balance carried beyond the grace period. It, too, is avoidable.
“The easiest way to bypass paying this fee is to pay your balance in full every month,” said Molly Ford-Coates, a certified credit repair specialist at Ford Financial Management, LLC, in El Paso, Texas.
Another way to temporarily avoid paying this is to open a credit card with a 0 percent interest rate. “This usually only lasts between 12-to-18 months,” Ford-Coates said. “This can be negotiated by calling and asking for an interest rate reduction. The company may be more willing to do this if you have a good history with them.
“That said, however, it could also work if you have fallen on temporary hard times,” she added.
Balance transfer fee. Often, credit card holders look to transfer their existing balance to a 0 percent introductory rate credit card.
“However, while they may pay no interest for s predetermined time period - usually 12 to 18 months - they may have to pay a fee to transfer that balance,” Ford-Coates said. “This could be a percentage of the balance (usually around 3 percent) or a flat fee (which varies, but expect to pay between $5 and $50 in total fees.”
Annual fee. This is a one-time annual charge that the company charges just for owning a credit card. Generally speaking, the higher the annual fee, the more perks and benefits you receive with the card.
“It’s up to you to decide whether it is worth it,” Ford-Coates said. “This fee can be avoided entirely by not getting a credit card with an annual fee.”
It’s also worth asking your card provider to waive the fee. Many will do so for the first year at least, if you ask, Ford-Coates noted.
International credit card fees. This fee probably won't be waived by your credit card provider but should absolutely be avoided.
“Foreign transaction fees are usually in the three percent range and are charged on every purchase a cardholder makes on their card while abroad,” said Brooklyn Lowery, senior manager and site editor for CardRatings.com. “There are numerous cards that don't charge that fee, though, so it's worth looking into one of those cards if you'll need to use a credit card overseas.”
Cash advance fees. Cash advance fees are the price you pay to use your credit card to withdraw money from an ATM or bank, with the average fee often in the 5 percent range.
“The bad news here is that cash advances begin accruing interest right away instead of after a grace period, as is typical for standard purchases,” Lowery said. “Your $500 cash advance could cost you $25 in a cash advance fee, plus an interest rate in the 25 percent range until you pay it back in full.”
“That makes cash advances as rarely a wise idea,” Lowery noted.
Once you have a good idea of the credit card fees you’re paying, hop on the phone or internet, contact your credit card company, and start asking to cut as many fees as you can.
If you’re a card customer with a good track record of spending with the card and paying your bills on time each month, there’s a strong likelihood you can get some of those fees curbed over time – if not eliminated altogether.