You Can Avoid Credit Card Fees Charged To Customers And Find Low Interest Cards Today!
Banks love credit card fees charged to customers as much as we hate credit card fees and charges. We all want something for nothing – it’s human nature. We want to buy things at our leisure and pay when we can afford it, earn free miles and other bonuses, extend our warranties and all the great things that credit cards let us do, and we want it all for no fees. And we think we deserve it. But we can’t always get it.
Sure, there are zero percent APR credit cards out there. But more often than not these no interest periods are temporary – hey, the credit card companies have to make money somehow! If you manage to find a zero percent APR card that is permanent then it probably brings with it an annual fee. Again, they have to make money somewhere, thus the reason for credit card fees charged to customers.
Of course, qualifying for zero interest credit cards, and even low interest cards with interest in the single digits, is tough. You need to have good credit – usually well above 700, scores that relatively few Americans have. But there are ways that you can enjoy the perks of credit cards without the high fees, ways which are more about how you use your cards rather than your credit score. Here are credit card fees explained.
Avoid High Credit Card Fees Charged to Customers
The most obvious way to avoid paying interest is not to carry a balance on your credit cards. That’s right, pay them off in full every month and you will never pay a cent in interest charges. This means that you can have a credit card with a terribly high interest rate and, as long as you have no annual fee, you may never pay a penny to use it.
Of course, you also have to be careful not to go over your credit limit to avoid over the limit fees and never be late on a payment to avoid both interest charges and late payment penalties.
The Dangers of Cash Advances – Credit Card Charges Explained
One fee that you really want to be careful of is cash advance fees. These are fees charged to you when you take cash out, or write a check from, your credit card. Usually these types of withdrawals, as well as balance transfers, will cost you a one-time fee when the transaction is completed and also a higher interest fee than you pay on payments. And the fees can add up fast.
Let’s say that you are running short this month and you take $100 out on your credit card. You might pay a 5% fee for that, which means that when you withdraw that $100 you now owe the bank $100 for the withdrawal, $5 for the fee, and perhaps another $3 for the ATM fee by the bank that you used to get the cash. You now owe $108 for that money and that is assuming you pay it before any interest is assessed. Sometimes cash advances are assessed interest from day one, with no grace period, so you may owe even more by the time the bill comes.
Avoid cash advances whenever possible.
How Much is Your Card Costing You?
You can figure out how much that credit card balance is costing you with a simple formula.
Most likely your credit card adds interest daily by applying your APR to the average daily balance. To get credit card rates explained and an idea of how interest works here is what you do:
- Figure out your average daily balance by talking your daily balance from every day and adding it, then divide it by the total number of days. So let’s say you are about to buy a new oven that costs $1,000. You had zero balance on the first of the month and planned to buy the stove on the 11th. There are 30 days in the month. So, your balance is zero for days 1-10, then 1,000 for days 11-30. That’s an average daily balance of about $667 for that month.
- Now, divide your APR by 365 to figure your periodic rate. Say your interest rate is 22%, which is .060 when divided by 365.
- Now, multiply the daily balance by the number of days in the billing period by the interest charge for the period then divide by 100.
- Here it is for our example:
Average daily balance x days in period x daily interest rate / 100
667 x 30 x .060 / 100 = $12.00
The stove will cost you $12.00 the first month. Keep in mind that it will cost you more the next month because your average daily balance will be higher for those first 10 days of the month.
When you consider credit card fees charged to customers and how much your credit card use is costing you be sure that you look at the entire picture. Consider the interest rate, but also any fees that you are paying such as annual fees, over the limit fees, late payment fees, balance transfer fees and cash advance fees. If you are not careful your credit card use could be costing you hundreds, even thousands of dollars, every year. In fact, all these fees can actually double the cost of each item that you purchased using the card if you let balances linger for too long.
A credit card with zero fees can be hard to find. The truth is that sometimes, especially if you have less than perfect credit, you simply have to accept credit card interest and fees as part of the privilege of using credit cards. However, if you are careful you can keep the costs you incur to a minimum.
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