Protect Your Finances: Watch Out for These Typical Credit Card and Loan Charges!

Explore the different ways credit card companies and lenders can extract money from you, empowering you to safeguard your financial well-being.

Most Frequent Covert Fees in Credit Cards

Late Payment Fee

Missing a credit card payment not only harms your credit score but also impacts your finances.

Late payments often attract additional charges on your account.

To evade these fees, strive to pay your credit card bill punctually every month, even if it’s just the minimum amount due.

Use calendar reminders or set up automated payments through online banking.

Foreign Transaction Fee

If you frequently travel abroad or shop from international sites online, you might encounter foreign transaction fees on your credit card statements.

Many credit cards levy charges for transactions in foreign currencies, typically around 2.5% of the purchase amount.

To bypass these charges, consider using a credit card that waives foreign transaction fees for international travels or online shopping.

Penalty Interest Charges

If you carry a balance over months, interest charges become inevitable.

However, consistent late payments might lead to a higher interest rate than advertised.

This penalty interest rate, often called the penalty APR (annual percentage rate), is applied when numerous payments are missed in a short period and can escalate to 30% or higher.

To dodge the penalty rate, make sure to pay your balance promptly.

Overlimit Fee

Each credit card has a credit limit, dictating the maximum amount you can spend at once.

Surpassing that limit may result in an overlimit fee if your card issuer approves the transaction.

These fees generally range from $25 to $30.

To steer clear of overlimit fees, monitor your spending closely, adhere to a budget, and routinely check your credit card balance to track remaining credit.

Annual Fee

An annual fee is levied solely for having and using the card. These fees can vary from $20 to several hundred dollars.

Cards offering substantial cashback rewards typically entail higher annual costs.

In essence, the more value a card offers, the higher the expected cost for its use.

Typical Stealthy Charges in Personal Loans

Prepayment Penalties

These fees are incurred for repaying your loan before its due date.

If your lender enforces prepayment penalties, early loan repayment savings could be less than anticipated.

To avoid these fees, meticulously evaluate your personal loan options.

Ask the lender directly or review the loan documents to check for prepayment penalty clauses.

Origination Fees

Origination fees represent a percentage of the total amount borrowed.

While common with mortgages, some personal loans may apply them based on your creditworthiness.

Application Fees

Application fees are incurred solely for submitting a loan application.

Prior to applying, ensure your genuine interest in the loan, confidence in potential qualification, and acceptance of the terms.

This approach helps avoid multiple application fees.

Late Fees and Return Check Fees

A late payment typically results in a fee. Likewise, bounced checks can trigger charges from both your bank and the lender.

To evade late fees, set calendar reminders or automate payments, ensuring adequate funds in your account to cover the balance.

Now equipped with strategies to sidestep credit card and personal loan fees, feel free to delve into the pros and cons of balance transfer cards by clicking the button below.