Many consumers are trying to be wiser with their credit cards. They avoid splurging on gifts during the holiday season. They don’t apply for a store credit card every time they’re offered 10 percent off their purchase. Yet hidden charges and overlooked terms and conditions might be covertly padding some consumer credit card balances.
Annual fees are rising. On average, Americans paid more than $17 for these fees last year, up 70 percent from $10 in 2010, according to CardHub.com. Average maximum late fees also have risen to more than $35 over the same period.
“Many people are using credit responsibly — they’re working hard to keep balances down, but they may be undermining that effort over time by overlooking the fine print,” says Mikel Van Cleve, USAA personal finance advice director.
When evaluating cards for unnecessary fees, he says to first make sure it doesn’t charge a fee for something you do often.
“For example, USAA Bank recently eliminated foreign transaction fees on all of our credit cards. If you frequently travel abroad, a card with no foreign transaction fees could provide significant savings,” Van Cleve says.
In addition to foreign transaction fees, Van Cleve also recommends keeping an eye on sneaky fee fine print:
Changes in APR. Many cards offer an attractive “introductory” interest rate but may hike the rate up significantly after the promotion expires. If you plan on keeping a balance on the card, make sure you look for a card with a low A PR after the introductory rate expires.
Penalties on late payments. Credit cards often have a penalty APR when you pay late. Check out the terms of your account to ensure you aren’t getting an interest rate hike due to a late payment.
Balance transfer fees. Credit cards usually come with a fee to move a balance from another card. Make sure you know the cost of transferring the balance. Often people move a balance to another card with a lower interest only to learn that they’ve lost the savings to a balance transfer fee.
Reward terms. Understand the terms of your credit card so you don’t lose points or cash rewards because of a late payment or expiration date. It’s also smart to know what incentives and special offers are available with your card. Focused on airline miles? See if booking hotel rooms and rental cars with your card earns you more miles, for instance.
Hidden costs for cash advances. Some cards have higher interest rates for cash advances than regular purchases. Before withdrawing cash, make sure you know the true cost of getting that extra cash.
This kind of fine print is commonplace, so it’s important to understand what fees are on your card and how your spending habits impact the additional fees you can pay. Choose your cards wisely, and you should be able to find a card that fits your needs without paying a fortune in fees.