KNOXVILLE (WATE) – Credit card fees are one of those things card users should watch closely. Different types of credit cards charge different kinds of fees and many of them are avoidable.
If you have ever been hit with a late payment fee, you know how it hurts. In a study by CreditCards.com out of 100 companies studied, 99 charge a late payment fee Most charge $37 a pop.
If you’re simply forgetful, use one a calendar app or other technological advances. For example, many people use the “reminder” features in Google Calendar – one of many options out there, and many are free.
If you have been charged a “late payment fee” because you didn’t have the money to pay even the minimum balance on time, you need an entirely different solution. First off, find and start using a free financial tracking app like PowerWallet. You’ve got to figure out how your income is disappearing before you can even pay your bills, and that requires tracking where every penny is going. Once you have a handle on your incoming and outgoing money, you can get serious about starting an emergency fund and paying off your debt.
Back to that CreditCards.com study, 98 out of 100 charge a cash advance fee. It typically costs $10, or five percent of the amount of the advance, whichever is more. If you even think about taking a cash advance from your credit card, know it will likely cost you more than you realize. A cash advance on your credit card is really just an expensive short-term loan. Plus, you’ll pay a steep interest rate.
There are better options. A personal loan stands to be cheaper or borrowing from a family member to avoid the fee.
Of the 100 cards studied, 80 charge a returned-payment fee, which typically runs as much as $37. This fee is charged by your credit card issuer if you pay your bill with a check that bounces. The solution here, if cash flow is an issue, is to start tracking your spending and supplementing your income. Then, you can afford to start building an emergency fund and tackling debts.
Another fix is to link your savings account to your checking account such that if you run out of cash, money will be pulled from your savings so that your check won’t bounce.
A better fix might be to ditch checks for online payments. If you have to go online to pay your credit card bill anyway, it will only take you a few extra seconds to log into your bank account and check the balance before paying the bill.