Credit Card Costs: How Much Do Credit Cards Cost?
Posted February 7th, 2010 and last modified May 30th, 2011
Credit card costs are different for each company, so review all the fees and extra charges of various card lines before choosing which one is for you.
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If you have been considering getting a new card in the near future, you will need to find out what kind of credit card costs will be associated with it. Take a look at this article to learn more information about the costs involved when you own a credit card.
When you are shopping for a card, you have to look at the different credit card costs that are charged by each individual company. Interest rates, penalties and other associated fees can heavily influence your credit rating. This can have a very negative impact, especially if you want to keep marginally low interest rates and be able to keep your credit card for many years to come.
Lowering credit card costs:
A certain way to avoid poor credit and keep credit card costs at a minimum is to make sure that you can make the payment on time every month. If you can do this, then you will not encounter as many fees and penalties. A good way to make sure this happens is by calculating all of your finances before making any purchases on credit. In other words, if you are not sure that you will be able to come up with the money in a specific amount of time, then don’t make the purchase.
Late payment fees are usually about $35 depending on which company you are with. In order to avoid this fee, make sure that you send in your payment early so that you don’t miss the due date. Another fee that comes with credit card use is a bounced check fee. Usually this is around $30 and happens when you send out a check with insufficient funds in your account. A cash advance fee will appear on your monthly statement if you withdraw money from an ATM. There is usually a flat fee charged on top of a percentage of the amount withdrawn. Avoid making a cash advance if at all possible.
When you make a purchase, one thing to consider is whether or not you have the credit available on your credit card. If you go over your limit, you will receive an over limit fee. This is about $30. When you choose a credit company a very important thing to consider is the credit card costs that are associated with owning one. Interest rates vary from card to card, but there is a default rate that is put into effect when you miss payments. When you make a purchase just be certain that you can pay it back in full at the end of the month. This will mean that you will probably not have to pay any interest at all.
You will have to pay a lot of credit card costs if you are the type of person that makes late payments, uses the card for cash advances or cannot pay off the balance in full every month. If you are the kind of consumer that follows a budget and knows what can reasonably be put on the card every month so that it can be repaid by the due date, then your costs will be very minimal. Also, transactions incurring a high interest rate, such as cash advances, should be avoided.
Reduce your credit card costs with online comparison
If at the end of the month you find you are unable to pay off your credit card balance, the best thing you can do is to use your own money as much as possible instead of the card. It is also important to consider if you have the right credit card, and if not, do an online comparison to find a better card to switch to, and reduce your credit card costs.
What is the point in paying a high amount of interest, and credit card costs to use somebody else’s money, when you can use your own debit card in the same convenient way you use your credit card.
If you find you only use your credit card now and again for nights out, filling up your car with petrol, or the occasional shopping trip, then if you do not need the benefits that reward cards offer, you are better off leaving these higher fee cards alone, and instead go for a no fee, low interest card.
If you spend on your card regularly and enjoy benefits such as free travel and reward programs, and are able to pay off your balance in full at the end of every month, then it may be worth taking on a card with a higher interest rate, and annual fee that offers these benefits.
Best way to keep credit card costs down
The best, and most obvious way to keep your credit card costs down, whichever type of card you are holding is to pay off the full balance at the end of every month. That way whatever rate you are on, you will never have to accrue any interest on your purchases, thus keeping down your monthly credit card costs.
The other way you can use credit cards effectively (but only if you have self discipline), is to use two cards. Use a card offering many interest free days and reward points for all your purchases, and then at the end of the month pay off the balance by using a cash advance on a low fee, low interest card.
This way you gain the benefits of the reward points, and interest free days on one card, whilst being able to pay it off with the lower interest rate card. This trick of only works effectively if you pay off the cash advance on the low rate credit card at the end of the said time frame. Otherwise you start paying interest which defies the point of the exercise.
If used correctly, credit cards can be a very effective means of paying for things whilst not needing to find the real money straight away. At the same time you can earn yourself some nice cash or reward benefits. You must however be very strict with yourself, as overspending and underpaying can very quickly set you on the road to debts-ville.
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