6 Credit Card Costs You Should Never Pay

Man calling his credit card company about a charge
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Credit cards can be a great financial tool, helping you build credit to accomplish other goals, as well as providing you with a way to earn rewards.

However, credit cards can also come with a hefty cost. If you use credit cards, there are a few costs you should do your best to avoid paying.

1. Annual fee

Does your card charge an annual fee? You might be able to have it waived. A few years ago when one of my credit card issuers added a fee, I called and asked to have it waived — and was successful. The key is to have a history of being a good customer — meaning your issuer wouldn’t want to lose you — and be willing to cancel your card if the company does not waive the fee.

Another way to avoid an annual fee is to switch to a credit card that doesn’t charge one. There are tons of credit cards that offer rewards programs and perks without charging an annual fee. Money Talks News’ credit card search tool can help you find the right one.

2. Finance charge

This is the interest you pay when you carry a credit card balance from month to month. One of the best ways to avoid the finance charge is to pay your credit card balance in full each month. When paying for something with your credit card, make sure that the purchase is within your budget and you’ll be able to pay it off before interest starts accruing.

Additionally, you can look for cards with a 0% annual percentage rate (APR) that offer a temporary reprieve on purchases or balance transfers for a set period of time. While it’s not a permanent fix, it’s a way to avoid the finance charge for a short period of time.

If you’re unsure where to start looking for such a card, check out “Beating Credit Card Debt in 2021? Use the Best Balance Transfer Cards.”

Finally, some credit card issuers will lower your APR if you just ask. If you’d like to reduce your APR, even if you don’t eliminate it altogether, this can be a way to save money on finance charges.

3. Late fee

Rather than risk paying late, and being charged a fee, consider setting up automatic payments with your credit card issuer. Many issuers allow you to automatically pay the statement balance on the due date, which helps you avoid the late fee.

If you have been charged a late fee, you might be able to have it waived, just by calling and asking.

4. Expedited-payment fee

Making a last-minute payment? You might have to pay a fee to have it applied in time to avoid being late.

To avoid this cost, you can either set up automatic payments, choose a day of the month to pay your bills or schedule all your payments at once. Getting in the habit of making sure that everything is paid ahead of time, and having a plan, can help you avoid these extra fees.

5. Over-limit fee

Your credit issuer can’t charge you an over-limit fee unless you give them permission to exceed your credit limit. But if you authorize your card issuer to process charges that would put you over your credit limit, you could be charged a hefty over-limit fee.

The U.S. Consumer Financial Protection Bureau (CFPB) explains:

“If you have agreed to permit over limit charges, you generally can be charged a fee of up to $25 the first time you exceed your credit limit and a fee of up to $35 if you are over your limit a second time within six months. However, the fee cannot be larger than the amount by which you exceeded your credit limit.”

To avoid this fee if you’ve already authorized over-limit charges, you need to contact your issuer and notify them that you no longer want to allow it. You have the right to do this at any time, the CFPB says.

Find out what process you need to follow, including whether you need to send something in writing. While you still have to pay the fee for past charges, in the future you won’t be charged an over-limit fee.

6. Cash-advance fee

When you get cash via your credit card, you usually have to pay a fee, on top of the higher APR that many card issuers charge for cash advances. Build an emergency fund to reduce the chances that you’ll need to turn to your credit card in the event of an emergency.

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