Credit cards are useful tools that allow you to manage your expenses in a better way. They offer you easy access to short-term credit while offering you rewards for using them. The various benefits of a credit card come at a cost that includes annual charges and a variety of other fees.
The cost of using a credit card is especially high when you carry balances month to month and the same attract interest charges. The use of credit cards entails several other fees which depend on the way you manage your card.
Here are some tips on how you can save on credit card charges and the processing fee:
Negotiate the annual fee-
Annual charges are the fee for using a credit card during a year. You can easily save on this expense by negotiating with the credit card issuer especially when you have good credit scores and an excellent record of timely payments on your existing cards.
Interest or Finance Charges –
These charges are not fixed and depend on the outstanding balance against your credit card. Any delay in payment will attract late payment charges. Also, if you do not pay the bill amount in full and instead choose to pay the minimum due amount, the outstanding amount is carried forward to the next month. The interest charges on this outstanding amount can be quite high. You can avoid these charges by paying your credit card bill in full by the due date.
Foreign transaction fees–
This fee is applicable when you use the card outside the country. The best credit cards charge a minimal or no amount for such transactions.
Cash Withdrawal fee–
This fee is applicable when you withdraw cash against your credit card. Since the withdrawn amount is added to your credit card balance it attracts interest. Also, this fee becomes applicable from the day of withdrawal itself and not after the end of the billing cycle. You can avoid this fee by ensuring that you have adequate funds in your saving accounts for emergency use and do not withdraw cash against your credit card.
Returned Cheque Fees–
These charges are applicable when for some reason the cheque or the payment made by you against the credit card bill gets rejected. Your cheque may be sent back due to insufficient funds or wrong signature or any other discrepancy in the cheque. You can avoid these fees by being extra careful while paying your credit card bills.
Over the Limit Fee–
This fee is applicable when you use your credit card beyond the limit sanctioned to you. You can avoid these charges by keeping track of your credit card spends in a billing cycle. You can also redeem your credit card reward points to get extra discounts or avail of offers that reduce your expenditure and allow you to remain within limits.
Balance Transfer Fees –
This fee is applicable when you switch your balances from one credit card to another one with lower finance charges and better terms. You need to compare the advantages of the new credit card with the additional cost for the transfer of balances.
The key to avoiding the various costs associated with using a credit card is to be disciplined and regular in your due payments, keep track of your expenses and not overdraw.