Credit cards are an almost essential part of many people's lives, because they allow you to increase your cash flow and have more financial freedom. However, if you use credit cards too much or in the wrong way you can be stung with large credit card fees and penalties. Avoiding these fees will help you to cut the costs of using a credit card and get the most out of its benefits. If you want to know how to avoid these credit card fees then this article can help you do just that.
A grace period is the time you have to pay off your credit card debt before you start paying interest. Although many cards used to have good grace periods, these are reducing and some have none at all. This means you will start accruing interest from the moment that you make a purchase. If your card does have a grace period, then the best way to avoid extra interest charges is to pay off the balance in full before the end of each grace period. This will mean you can use your credit card without having to pay interest.
One of the most expensive fees you might have to pay is for late payment. Although you might not think this will apply to you, it is very easy to be a day or two late with payment, especially if you have a lot of cards and bills. Late payment fees can be as much as £35, and if you are near the end of your credit limit could trigger other penalties such as over limit fees. Before you know what has happened you might owe £100 in fees, which is basically money wasted. To avoid these late fees, try and pay your bill by direct debit if possible, or use online banking to speed up the process of paying your bill. This will ensure that your money arrives on time. If you think you are going to be late with payment, try calling your credit card company to inform them. If they know it will be late they might be able to waive the penalty fee, especially if you usually pay on time.
Another fee that can cost you money is the credit card annual fee. Although this fee used to be commonplace, less and less cards are now charging an annual fee. Unless you have a gold or platinum card, then you really shouldn't have to pay an annual fee. Although there will be some issuers charging annual fees, unless the benefits you get for the fee are significantly more than the fee you should find another card.
More than just the fees
Perhaps the biggest problem with some of these penalty fees is that if you have to pay them, it can mean more money lost for you than simply the penalty fee. For example, if you are late with payment a few times, the card issuer may remove your low interest rate. This could end up costing you a lot of money, especially if you have a large balance on your card. In order to avoid these fees, make sure you carry out your payment obligations, and also read the contract in full before signing for the card. That way you will know what the fees are in case the worst should happen.
Peter Kenny is a writer for creditcards-gb.co.uk Please visit us at 0% Credit Cards and 0% balance transfers Visit www.creditcards-gb.co.uk