There are ways to avoid paying even more on credit card bills.
Utilizing autopay for your credit card payments can be an excellent way to ensure you never miss a due date and incur late payment fees. However, even with this convenient feature set up, several other credit card fees can still catch you by surprise and increase your credit card debt. CNBC reported on some of the most common.
Only paying the minimum on your credit cards each month will result in ballooning interest charges being added to your balance each month. The interest then gets compounded the following month, creating a sort of debt snowball that grows quickly. Autopay can help you avoid missing a payment, but it may not prevent you from incurring interest charges.
It’s worth considering a balance transfer to a card with a 0% introductory APR, which can help put a pause on recurring interest charges while you work to pay down your balance.
Penalty APRs are levied when you miss multiple payments and/or fail to follow the guidelines set forth by your card’s terms and conditions. Even missing just one payment may revoke a 0% APR offer you may have been eligible for when you opened the account, for example. Missing a payment can also increase the APR you’ll owe on future statements.
If making the minimum payment is a struggle for you, even with autopay turned on, you can contact your card issuer before you miss a payment to discuss hardship solutions or perhaps negotiate for better repayment terms.
Fees For Non-Payment Due To Insufficient Funds
It’s standard that you’re required to pay your monthly credit card bill on the card’s specified date for your account. Oftentimes, this due date doesn’t align with your payday, whether you’re paid monthly, biweekly, or bimonthly. This can result in insufficient funds in your checking account to cover your payment. If autopay is turned on, and the payment amount is greater than your checking account balance, your checking account will go into overdraft. Typically, you’ll incur overdraft fees from your financial institution.
To avoid this issue, you can contact your card issuer to request a monthly payment due date that aligns with your payday. This way, you always have funds in your account to pay your required monthly payment.
Cash Advance Fees
Experian defines cash advances as charges that credit card companies assess when you tap into your line of credit to get cash. In most cases, cash advances come with high fees levied on your account and immediate interest charges.
An easy way to avoid cash advance fees is to utilize your credit card for purchases only. Consider alternative methods to access cash which may result in lower fees.
Foreign Transaction Fees
Using your credit cards for foreign transactions, whether you’re making a purchase in a foreign country or making an online purchase in another currency, can result in foreign transaction fees. These are charges assessed by a financial institution to a consumer who uses an electronic payment card to make a purchase in a foreign currency, according to Investopedia.
It’s good practice to be aware of foreign transaction fee terms associated with your credit card before traveling abroad or making foreign purchases online. The good news is that there are many credit card options available that have no foreign transaction fees, allowing you to make purchases with peace of mind.
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