Credit cards provide convenience and the ability to purchase items they may not otherwise be able to afford. Credit cards are a part of our everyday lives. But what are the credit card charges and how do you avoid them?
Credit card charges can be confusing, especially when it comes to understanding what they are and how the fee structure works. Learn more about what credit card charges are in this article and how to avoid them so that you don’t have any surprises during the bill has been generated!
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Common Types of Credit Cards Charges
There are a few common types of credit card charges that you may encounter. Here is a brief overview of each type of charge and how you can avoid them.
- Annual Fees: Many credit cards come with an annual fee, which is typically charged once per year. This fee can be avoided by choosing a card that does not have an annual fee.
- Late Payment Fees: If you make a late payment on your credit card, you may be charged a late payment fee. This fee can be avoided by making sure you make your payments on time. It also hit your credit score.
- Over-the-limit Fees: If you charge more to your credit card than your credit limit allows, you may be charged an over-the-limit fee. This fee can be avoided by staying within your credit limit.
- Balance Transfer Fees: If you transfer a balance from one credit card to another, you may be charged a balance transfer fee. This fee can be avoided by choosing a card with no balance transfer fee or by paying off your balance before the end of the introductory period.
- Cash Withdrawal Fees: If you withdraw cash from your credit card, you may be charged a cash withdrawal fee. This fee can be avoided as these charges are too high and the charges start from the day 1itself.
- Foreign Transaction Fees: If you use your credit card while travelling, you may be charged a foreign transaction fee. This fee can be avoided by using cash or another credit card when making purchases abroad.
Frequent Mistakes when using a Credit Card
Credit card charges can be tricky, and if you’re not careful, they can really add up. Here are some of the most common mistakes people make when using their credit cards:
- Not paying attention to interest rates. Interest rates on credit cards can vary widely, so it’s important to pay attention to what rate you’re being charged. If you carry a balance on your card, the interest charges can really add up.
- Making late payments. Late payments will usually result in a late fee being charged to your account. These fees can be quite sizable, so it’s important to make sure you pay your bill on time.
- Going over your credit limit. If you charge more than your credit limit, you’ll likely be charged an over-limit fee. This fee is typically around $35, so it’s important to keep track of your spending.
- Making cash advances. Cash advances from your credit card come with a host of fees, including a higher interest rate and a cash advance fee. It’s best to avoid these if possible.
- Using an old card. If you have a credit card that has annual fees, but you’re not using it anymore, it’s best to cancel it and get a new card with no annual fee. This can help you save money in the long run.
- Not shopping around for credit cards and lower interest rates. When your interest rate is nearing its maximum limit, it’s important to shop around for better credit cards with lower interest rates rather than paying more each month on your current account.
- Not collecting rewards and cash back on every purchase. Some people only use their rewards cards at certain retailers or when they are making purchases
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Conclusion
We hope that this article has helped you to understand credit card charges and how to avoid them. By being aware of the fees and charges that can be applied to your credit card, you can make sure that you are not paying any more than you have to. If you are ever unsure about a charge on your credit card statement, do not hesitate to contact your credit card company for clarification.