Note: In an effort to help you in the area of getting out of debt, this is a guest post from Ricky of Moneymax.ph. There is nothing more frustrating than receiving your credit card statement and seeing a fee that you are not aware of. You feel like being robbed in daylight. In the same way that ignorance of the law excuses no one, making yourself become aware of these fees is a significant step in protecting yourself. Awareness is the first step in taking control of your finances. Read on and enjoy.
7 Credit Card Fees You Need to Manage
By Ricky Publico
It’s a great feeling once you receive your first credit card. But before you go on a swiping spree, take the time to actually understand how a credit card works. For one, using a credit card means spending money you currently don’t have, which also means you will eventually pay for the items you bought.
More importantly, there are credit card fees you should watch out for. Aside from your monthly credit card bill, you have to take note of these fees and learn how to manage them. Taking note of these fees will also help you choose the right credit card for you.
Annual Fee
The annual fee is basically the membership fee you are required to pay for owning a credit card. It usually goes from an affordable PHP 300 to an extravagant PHP 12,000, depending on the type of credit card you have. Premium cards typically have higher annual fees while standard cards typically don’t reach PHP 500, so pick your card wisely.
There are also banks that offer credit cards with no annual fee, either for the first year or for life. Try applying for these banks so you can have one less credit card expense to worry about. If it can’t be helped, opt for a credit card with a lower annual fee or a bank that waives their annual fees for clients with good credit standing. Ask your current bank if they have such an offer.
Cash Advance Fee
Did you know that you can also withdraw money using a credit card? It’s helpful when it comes to emergencies, but it also comes with a price. Cash advance fees usually go from PHP 300 to PHP 600, or 2 percent to 5 percent of the amount borrowed, whichever is higher.
As much as possible, minimize your cash advances. Since this fee doesn’t have a grace period, your bill will continue to accumulate if you don’t manage it properly. If you took out a cash advance, make sure to pay it back in full to avoid snowballing the interest.
Late Payment Fee
As an incentive for cardholders to pay their credit card bills on time, banks began charging a fee for late payments. It usually ranges from PHP 300 to PHP 850, depending on the bank. The late payment fee will then be added to your next bill.
Avoid paying a late payment fee by paying your bills on time. It’s also better if you pay your monthly balance in full, not just the minimum amount due. That’s also another thing about credit cards: you can pay the minimum amount instead of the entire monthly balance. Do the former to avoid further debt.
Balance Transfer Fee
If you’re having trouble paying off your credit card debt, you can choose to apply for a credit card balance transfer. This involves transferring the balance of your old credit card to a new one with a lower interest rate. This makes it easier to pay off your credit card debt. The transfer itself comes with its own fee, ranging from PHP 100 to PHP 250 per approved transfer.
Overlimit Fee
Credit cards come with credit limits, or the amount of money you’re allowed to borrow from your credit card provider during a billing period. Once you go over the limit, they will charge you with an additional fee, usually ranging from PHP 300 to PHP 750 for every overlimit.
Foreign Currency Transaction Fee
You can use your credit card when traveling abroad, but there will be a foreign currency transaction fee worth 0.85 percent to 3.525 percent of the amount spent converted to PHP. Fortunately, there are credit cards with no foreign currency fees. It is advisable to get this type of credit card if you travel a lot.
Pre-Termination Fee
If you can pay back your credit card debt before your loan term ends, that’s great! Just take note of the installment pre-termination fee ranging from PHP 300 to PHP 500 or 2-5% of the remaining balance, whichever is higher. The fee might be a bit steep, but paying for it and freeing yourself from debt is way better than finishing the installment plan.
Hopefully, this list of credit card fees can help you manage your credit card habits. A good rule of thumb is to not swipe on something you can’t afford with cash, so always give every swipe some thought.
Author’s Bio: Ricky Publico is a content writer at Moneymax. Save money on car insurance, credit cards, and loans when you compare and apply at www.moneymax.ph! Visit Moneymax to know more.