7 Sneaky Credit Card Fees
21 Jul, 2018 / By Jennifer Hamilton
The credit card companies are trying their best in order to regain the losses they are going to experience as a direct result of the Credit CARD Act that just came into play. Although this act will reduce and prevent various types of fees, the credit card companies are finding ways around the regulations in order to still charge their customers with excessive fees. Here are seven such fees that credit card companies are being sneaky about. Ensure that you look at these thoroughly if you are thinking about obtaining a new credit card, as well as for any updates to your existing credit card.
Although the credit CARD Act narrows the total amount that is allowed as an annual fee to be capped at 25% of the borrower’s total credit limit, many credit card companies are finding a loophole in this new policy. Credit card companies are doing so by increasing their annual fees in order to push closer to the 25% cap. Due to this, it’s best to look for a credit card that has no annual fees whatsoever in order to avoid one with even a 25% charge, which is still considered quite significant.
Upfront Processing Fees
One sneaky way that credit card companies are trying to get around the 25% limit is to charge their customers an annual fee in advance. In order to do this they are charging people with an upfront processing fee in order to make customers qualify to be able to obtain the credit card in the first place. Fees for such credit cards can be as high as hundreds of dollars and are generally meant for bad-credit or no-credit borrowers who don’t have any other options. Be very wary of those credit card companies who are trying to get customers to pay a substantial fee in order to be able to get the credit card in the first place.
Balance Transfer Fees
It is reported that the average cost of a balance transfer fee has increased to over 33% since the CARD act has gone into effect. This is one area where fees are still allowed, and so credit card companies are taking full advantage of that by trying to get back some of the financial setbacks they are experiencing due to the new credit card laws. It is recommended that you look for deals on balance transfers that will give you a good interest rate, as well as lower fees when you do make transfers.
Cash Advance Fees
For the same reason that balance transfer fees are on the rise, those fees that go along with cash advances are also steadily climbing. Ideally, you should avoid cash advances all together as they are generally bad for your financial health, as they will cost you a great deal of money in the long term. However, if you must get your hands on some cash then try qualifying for a low-cost personal loan instead, as they will give you better interest rates than a cash advance.
Foreign Transaction Fee
This type of fee is increasing at a rate faster than any other type of credit fee out there right now. In fact, it is reported that these fees have increased by over 50% since the CARD Act has been passed. The simple solution to this sneaky fee hike is to avoid using your credit card when you travel anywhere abroad. Instead, withdraw and use cash wherever you go. If you don’t want to carry cash with you then you can always use traveler’s checks instead. Ensure that you explore all of your options when it comes to funding your travels in order to find the best one.
The hope is that you can avoid penalty fees all together. These fees include over-limit fees, late payment fees, etc. However, sometimes there’s nothing you can do about incurring these types of charges, which is unfortunate, as you will have to pay an even higher price than before the CARD act as these types of charges are on the rise for many credit cards. Try to avoid these types of fees at all costs in order to avoid the headache that comes with spending unnecessary money.
Inactivity fees are actually not allowed under the CARD act. However, that doesn’t necessarily keep credit card companies from finding a loophole. Sneaky companies have found a way around not being able to charge inactivity fees by placing minimum spending requirements on your credit card. Although you won’t be charged with an inactivity fee if you reach the minimum spending requirement, this is not the case if you end up spending less then that. This means that you still won’t be allowed to let your card be inactive.