You’ve probably heard or read the phrase “credit card fees” at some point. You may have even looked at your last credit card statement and see that there is indeed a fee. However, you may not be aware of how much you’re paying in credit card fees every time you swipe your credit card.
The best credit cards offer many benefits, but their fees can be a drag. The following is an overview of the most common fees charged by credit card companies and what they mean for your wallet.
1. Annual fee
Most credit cards charge an annual fee in exchange for perks like rewards and travel insurance coverage. If you use your card frequently, the annual fee may be worth it, especially if it comes with perks that outweigh the cost. But if you don’t use your card often enough to justify paying an annual fee on top of other charges, consider a credit card with no annual fee. The Tangerine Money-Back Credit Card is our best choice if you have a good credit score.
2. Late payment fees
Believe it or not, your credit card company doesn’t want to charge you late fees. They make money when you use your credit card, not when they have to penalize you for failing to pay on time. However, they do have to cover their costs, and a late fee is one way to ensure that those who don’t pay on time are held responsible for the costs associated with customer delinquency. Late fees can be as high as $30 (or more!) depending on the amount of your monthly balance. So how do you avoid paying this fee? Pay your monthly balance on time! If possible, set up automatic payments so that you don’t have to worry about forgetting.
3. Balance Transfer Fees
You’ve probably seen the credit card commercials: “Transfer your balance from another card to ours, and pay no interest for 18 months!” It’s an enticing offer, especially if you’re in debt to a card with a high APR. But before you take the bait, remember that there’s always a catch. Usually, these offers come with a balance transfer fee of 2-5%. This can add up quickly; for instance, if you’re transferring $12,000 at 2%, the transfer fee alone is $400. If you’re already in debt, that can hurt! So, if you want to take advantage of one of these offers, it’s important to consider whether or not the money you’ll save in interest will outweigh the transfer fee.
4. Foreign transaction fee
Many credit cards have a foreign transaction fee, which applies to all non-Canadian purchases. It’s typically 2.5% of the amount you spend, and that fee is charged on top of any service fee that may apply.
It’s important to note that while most cards charge a foreign transaction fee, some don’t. If you travel abroad frequently, you may want to consider applying for one of these cards instead.
In conclusion
The last thing you want to be worrying about is how much you’re paying for your credit card. With so many different types of credit cards out there, using one responsibly means avoiding all unnecessary charges.
