Credit cards have become a part of the general personal finance for millions of Americans. It is almost indispensible when it comes to taking care of everyday expenses like grocery and gas. Moreover, it helps people in organizing their finances and keeping all their money safely stowed away in a bank account while the card lets them access it anywhere and anytime. Likewise, credit cards also help consumers extend their spending when they are running short of cash and needs to take care of emergency expenses.
The credit card does have its multitude of advantages but there are times when you sit down to review your monthly statements and find that there are charges which you didn’t know existed and they can certainly add up to a significant amount which you may have a hard time paying. Here is a small list of credit card charges which most consumers unknowingly and unwittingly fall prey to.
Balance transfer fees
Although most of you are familiar with this category, the actual charge on this account can come off as a surprisingly rude shock. Most people resort to transferring balance from a high interest credit card account on to a zero interest card so that they can have an easier time paying off debts. The charges can be staggering and frankly, somewhat disproportionate, especially if you are transferring your balance to save money. The best option available is to look for a card which offers to waive the balance transfer charge.
Foreign transaction fees
You might be on a holiday abroad and you swipe your card when you check out of the hotel you have been staying in. You might even be using your card to make purchases while you are in a foreign country. Visa and Master card affiliated credit cards have made it easy for people to swipe almost anywhere in the world. On reviewing your card statement you will find that you have been charged an extra amount for every transaction which has taken place abroad and the charges might add up to a significant amount. To get around this problem, look for a credit card which doesn’t charge you extra for swiping it abroad. There are many such cards which also offer to waive the annual fees.
There are some credit cards which will still be usable and can be swiped successfully even if you have maxed them out previously. These cards carry what is known as an over credit limit fees and the charges can be well beyond $30 if it is swiped after having crossed the credit limit. Try and stay within your credit limit to avoid such an unnecessary charge and look for a card which cannot be used after it has been maxed out.
Cash advance fees
This is more or less a minor credit card trap which most people are not aware of and it can cause quite some financial problems. Using a credit card to withdraw money from an ATM or drawing foreign currency from a money booth will attract a cash advance charge which is well beyond 5 percent and above. Moreover, you will be paying a higher rate of interest on the money you withdrew right from the moment you make the transaction.
Second year annual fees
It a subtle ploy that many credit card companies use and it may come as a surprise to you when you receive your annual statement at the end of the year. Most reward cards usually waive the first annual fees to attract new consumers who generally wouldn’t opt for another credit card. The trick behind the waiver is the idea that you will forget that you need to pay the annual fees at the end of the second year of using the card. Some consumers do overlook this small subtlety and fall for this trick.
As a rule of thumb, try not to use more than 30 percent of your credit card’s maximum limit and avoid transacting wherever you think additional charges may be tacked on. This way you will never have to worry about one of these charges showing up on your monthly or annual statement.