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How to Legally Avoid These Credit Card Fees

There is an unspoken fear of getting into inescapable debt when it comes to credit cards. While spending is a pleasurable experience, especially when you are stressed out or celebrating, you have to be careful with the charges. Take note that some of these fees are avoidable in the first place. Therefore, know the credit card fees you could be charged. It helps you estimate your bill at the most realistic amount.

Aside from the interest rate, there are a few credit card fees you have to understand. This way, you can adjust your spending habit. In addition, it prevents bill shock. So arm yourself with the knowledge to save a few hundred dollars.

Annual Fee

The annual fee is the yearly membership fee. It is an automatic charge on both the principal and the supplementary cards. Nevertheless, most credit cards waive the annual fee for the first year of membership. After that, you have to pay the succeeding years.

The charged amount ranges from $50 to $500. Or , it could be more for the principal card. Meanwhile, some cards charge almost $2,000, such as UOB Visa Infinite Card. Moreover, if you got supplementary cards, you have to pay separate annual fees on those.

Furthermore, there are credit cards without annual fees. These are 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. For example, if you reach a certain spending amount.

Makes sure that the annual fee is less than the benefit you get from the card. Do you think you are paying a very high annual fee? Compare the benefits you receive in the form of rewards, rebates and promos. If it is indeed higher, it is better to close the account.

Balance Transfer Fee

Certain credit cards let you transfer your existing credit card balance to another credit card with a one-time fee. So there is no charge unless you use this feature. The usual Balance Transfer Fee is 3% of the balance transferred. However, if your primary purpose for getting a card is this feature, you can find credit cards that waive this fee.

Many credit cards waive the balance transfer fee. It applies if you transfer your existing balance within a month after opening your new account.

Make sure that you know how much the balance transfer fee is before using it. Remember, you transfer funds to save up and prevent further debt increase, not get more debt.

Cash Advance Fee

Use your credit cards to withdraw some cash. In some cases, your credit card is not acceptable at 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 with the interest rate. The latter charges on the cash advance every day until you settle it. You need to pay the cash advance fee and the interest rate with the advanced principal cash as soon as possible. There is no way around the cash advance fee. Therefore, use it only for real emergencies.

Finance Charge (Interest Charges)

It will only charge the interest fee if you fail to settle your balance on your due date. You don’t pay your balance to know how much it costs each day. 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 the computation, certain banks have different computations. Ask your bank how it charges the interest rate. Avoid finance charges. Therefore, settle 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. However, never underestimate your pocket money.

Also, there is a high chance that you will be converting the charged amount into Singaporean Dollars. However, do not expect your conversion to be the same in your bill. The exchange rate used for your foreign transaction can vary. It depends on the date it was processed and on the bank.  In addition, the banks consider international transaction fees charged by the Visa/MasterCard/American Express.

You can find a few credit cards which do not charge Foreign Transaction Fee. Therefore, review the credit card fees if you charge your overseas purchases in SGD.

Over-the-limit Fee

All credit cards have credit limits that 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. Instead, leave some allowance if you suddenly need to use it for essential purchases or payments.

Late Fee

If you fail to pay your balance on your bill’s due date, you will have to pay the late fee and 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.

Application Fee

The 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 crucial to settle your credit card bill on time. It prevents further financial headaches. If you need a quick cash loan to pay your bill, you can get it from Cash Mart with much ease.