Everyone is looking for the best deal for the money, and it is no different when it comes to credit cards. Credit card companies make most of their profits through fees, so it is no wonder that many consumers are looking for lower fees. Finding credit cards with low fees can be easily achieved through research and comparison of different credit cards.
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Know that recent legislation has helped to provide some relief to consumers concerning high fees, but that is just one side of the coin. Consumers also have a large part to play in keeping credit card fees as low as possible.
What are common fees that credit cards have?
Credit card companies are always on the lookout for new fees to charge customers; high fees equal high profits. However, there is usually a valid reason behind most of the fees that are charged.
If a credit card employee is involved or you receive a certain amount of convenience, then you can be reasonably sure that a fee is involved.
Common credit card fees and averages found by the Consumer Action 2010-2011 Credit Card Survey includes:
- Application fee. This fee is charged to process your application for a credit card, check your credit history, and make an approval decision.
- Annual fee. Also sometimes called a membership fee, this fee is charged once a year for the privilege of having a credit card account. Generally ranging from $18 to $150, not all credit card companies charge annual fees.
- Late fees. These fees are assessed when your payment is late. Late fees vary, but they can be as high as $35.
- Over-the-limit fees. Recent legislation has affected this fee that is charged if you go over your credit limit. This fee can be as high as $35.
- Cash advance fees. These fees are usually in the form of a percentage of the total cash that is advanced to the consumer. The average percentage charged for cash advances was 3.81% in 2010.
- Balance transfer fees. This fee is also usually in the form of a percentage; it is assessed when consumers transfer the balance owed with one credit card onto a different credit card. Some introductory offers charge a 0% balance transfer fee, but the average was 3.53% in 2010. Some credit cards do charge a minimum or maximum balance transfer fee that range from $5 to $100.
- Foreign transaction fees. If you spend money with a merchant outside the U.S., expect a 1% to 3% charge added to your original transaction. This is charged to cover the conversion of U.S. dollars to foreign currency.
- Returned payment fee. If your payment to your credit card company bounces, expect a fee of up to $35 from your credit card company to add to the fees from the bank.
Did the Credit CARD Act of 2009 change fees?
Legislation in 2009 under the Credit Card Accountability, Responsibility, and Disclosure Act aimed to protect consumers from unscrupulous credit card fees, among other issues.
Credit card companies can only allow your balance to go over the limit if you give them permission to do so. Otherwise, your card will decline rather than go over the limit thus charging you a fee.
Fees outside of late payment charges cannot total more than 25% of your beginning credit limit. Therefore, if your credit limit started out at $1,000, then your fees for the year cannot be more than $250. Late fees cannot be higher than $25 unless you have had another late payment in the last six months or your credit card company sustained higher than usual costs from your late payment.
Late fees cannot be more than your minimum payment.
Over-the-limit fees cannot be more than the amount you overcharged. You can only be charged one fee per violation, such as a late payment or over-the-limit charge. You cannot be charged an inactivity fee for not using your credit card.
How can I keep credit card fees low?
While the government has enacted legislation to protect consumers from high fees, consumers themselves can have an impact on keeping fees low. Firstly, don’t do business with credit card companies that have high fees. Those companies will eventually lower their fees to stay competitive. Compare the fees of different credit cards to find out which have lower than average fees.
Next, try to limit those fees that are avoidable. Resist using balance transfers or cash advances. Most important, make your payments on time and stay well below your credit limit! Late payments and high debt result in lower credit ratings along with incurring credit card fees.
Where can I compare credit card fees?
Each credit card company must post the terms and conditions of the credit card accounts available to consumers. The posting must be in a public format, such as on the credit card company’s website.
Use the FREE credit card chaser to chase down the lowest fees on credit cards right now!
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