Understanding Common Credit Card Fees
One of the most prominent reasons for debt in the United States is credit card debts. Experts often attribute this to a lack of understanding about credit cards in general, and what they entail. Credit cards have fees for using their credit, and there are some fees that are commonly found in credit cards. Here are some of the most common.
Consumer Legal Rights and Understanding Credit Card Fees
First, you should know that since 2011, the Dodd-Frank Wall Street Reform and Consumer Protection Act has prohibited credit card companies from exceeding a certain cap on required fees. This is to protect the consumer legal rights from exorbitant fees and hidden charges.
The most common fee is an annual fee. This can be charged once a year, or split into monthly payments. How it is charged is at the discretion of the credit card company and will be outlined in your original contract. This fee is charged for having the credit card available. It is mostly found on charge cards and secured cards. If you want to avoid this fee, you need great credit and should opt for a rewards card or some major credit cards. However, be careful to explore all of your options. Some higher reward cards, such as travel cards, still charge an annual fee, but the rewards outweigh the expense.
Sometimes, you may wish to move your money around. When you move your balance from one card to another, this is called a balance transfer. Many people opt to do this because it can reduce your interest fees. You won’t get this service for free, however. A balance transfer fee is typical, and is usually around three or four percent. If you wish to avoid this fee, look for a credit card that gives an introductory waiver of the balance transfer fee. Some cards will not charge a balance transfer fee the first six months or more.
Do you like to travel? A foreign transaction fee is your item to watch for. When you make a purchase outside of the United States, you are subject to these fees. You should also be wary when ordering online, because if the purchase is processed by a foreign processor, you could incur this fee as well. If you travel often, you should look into a credit card with no foreign transaction fees. If you are not a frequent traveler, keep your credit card purchases minimal and carry cash when in a foreign country.
These are a few of the most common fees, but there are several more you could incur. If you have a credit card or are looking to get one, make sure you read your contract carefully, understand your consumer legal rights, and stay apprised of potential credit card fees.