When it comes to credit cards, there is an unspoken fear of getting into unescapable debt. While spending is a pleasurable experience especially when you are stressed out or celebrating, you have to be careful not to be charged with fees you could have avoided in the first place. Knowing the fees you could be charged with helps you estimate your bill at the most realistic amount.
Aside from the interest rate, there are a few fees you have to understand so you can adjust your spending habit. Prevent bill shock, so arm yourself with knowledge to save a few hundred dollars.
Annual fee is the yearly membership fee automatically charged on both the principal and the supplementary cards. Though most of the credit cards waive the annual fee for the first year of membership, you have to pay the succeeding years. The charged amount ranges from S$50 to $500 or more for the principal card. Some cards charge almost S$2,000 such as UOB Visa Infinite Card. If you got supplementary cards, then you have to pay separate annual fees on those too.
You can find credit cards which do not charge annual fees like ANZ Switch Platinum Credit Card, UOB Professionals Platinum Card, HSBC Advance Visa Platinum, Maybank Platinum Visa Card and CIMB Visa Infinite Card. Other credit cards waive fees if you meet certain conditions such as charging certain amount.
Makes sure that the annual fee is less than the benefit you actually get from the card. If you think you are paying very high annual fee compared to the benefits you are receiving in forms of rewards, rebates and promos, then it is better to close the account.
Balance Transfer Fee
There are certain credit cards that let you transfer your existing credit card balance to another credit card with a one- time fee. You will not be charged unless you use this feature. The usual Balance Transfer Fee is 3% of the balance transferred, however if your main purpose for getting a card is this feature, then you can find credit cards which waive this fee. A lot of credit cards waive the balance transfer fee if you transfer your existing balance within a month after you opened your new account.
Make sure that you know how much the balance transfer fee is before you use it. Remember that you are doing the transfer to save up and prevent further debt increase, not get more debt.
Cash Advance Fee
Credit cards can be used to withdraw some cash in case your credit card is not acceptable in that moment. It is almost the same when you withdraw from your debit card at an ATM, however, the cash will be deducted from your credit limit. The Cash Advance Fee usually ranges from 3% to 6%. Do not confuse this fee from the interest rate charged on the cash advance every day until you settle it. You need to pay the cash advance fee and the interest rate with the principal advanced cash as soon as possible. There is no way around the cash advance fee, use it only for real emergency situations.
Finance Charge (interest charges)
Interest charge will only be charged in case you failed to settle your balance on your due date. To have an idea of how much you are charged on each day you don’t settle your balance, find your credit card’s Effective Interest Rate per annum. Let’s say that your card has an interest rate of 24% a year, then your daily interest charge is 0.066%.
Though this is how it usually done, certain banks have different computations. Ask your bank how it charges the interest rate. Avoid finance charge by settling the whole balance on or before the due date.
Foreign Transaction Fee
When you go abroad, you are most likely to go shopping with your credit card especially if you have underestimated your pocket money. There is also a high chance that you will be converting the charged amount into Singaporean Dollar, however, do not expect that your conversion to be the same in your bill as the exchange rate used for your foreign transaction can vary depending on the date it was processed and on the bank. The banks also consider international transaction fee charged by the Visa/MasterCard/American Express.
You can find few credit cards which do not charge Foreign Transaction Fee if you charge your overseas purchases in SGD.
All credit cards have credit limits which will depend on the holders’ salary and creditworthiness deemed by the bank. To avoid this fee, never max out your credit card unless it is an emergency. Leave some allowance in case you suddenly need to use it for very important purchases or payments.
If you failed to pay your balance on your bill’s due date, you will have to pay the late fee together with the interest rate. To avoid this fee, you have to settle your balance on time. In case you can’t pay the whole amount on the bill, you can at least pay the minimum required amount.
Processing fee is a one-time fee you have to pay when opening a credit card. Some banks waive this fee if the applicant has an outstanding credit history.
As you can see, it is very important to settle your credit card bill on time to prevent further financial headache. If you need quick cash loan to settle your bill, you can get it from Cash Mart with much ease.
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