Credit Card Fees and Charges Explained

Credit cards come with fees and these confuse so many people. To avoid that, here are simple, straightforward explanations for each one.

Annual Fee

This is your basic membership fee. To be paid just for the purpose keeping your credit card and being able to use it. This can usually be avoided by spending at least a specific amount of money. For some banks, a minimum spending amount will automatically waive your card's annual fee. With some other banks, you can request that (subject to approval) or use your credit card points to avail of the fee waiver. I have a review of cards without annual fees here.

Balance Transfer Fee

A balance transfer is the moving of an amount due for one credit card to another card. This is usually done if the debt is already large and if it would be convenient to pay for the debt in installments. This usually comes with a fee which can be avoided by avoiding balance transfers altogether. It's a matter of responsible credit card use.

Card Replacement Fee

If your card is lost, stolen, or damaged it must be replaced. This fee is meant to cover the cost of producing a new card and sending it to you. Take care of your cards and mind your belongings. If you do, you won't need to replace any cards.

Cash Advance Fee

A cash advance is a loan made from your credit card's issuing bank. The card's available credit is the collateral for this loan. This is usually a bad idea and should only be used during emergencies because the fee is usually very high. You might end up like this guy.

Finance Charge

This is your basic "interest" charge. This means that the finance charges (usually in percentage) will be calculated if you are unable to pay your entire credit card bill. The remaining amount after payment will be charged. To avoid this, it is best to always pay your entire bill. Any remaining amount is a balance and will be charged. Try to spend within your means. Keeping a balance is never a good idea.

Foreign Transaction Fee

Although some banks may handle your foreign transactions (in other currencies) for free (especially with elite cards; see the three tiers or credit cards here), some will charge a fee for mainly the conversion of currency since your bill is usually charged in the local currency. This can be avoided by choosing to be charged in your local currency, if you have a choice.

Late Payment Fee

Missing a payment is one of the worst mistakes that can be made by a credit card principal cardholder. This will not only result in a large amount being charged but will also harm your credit score. It is always best to make sure you pay on time. To avoid confusion, write down the due dates and amounts. You can avoid looking like this.

Overlimit Fee

Our credit cards by default, have spending limits. The available credit amount is a result of the deduction of current spending from the total credit limit . If you spend beyond this limit with your credit card, this fee will be charged.

Pre-Termination Fee

Big purchases are usually paid in installment payments. I have a story about those here. When making use of installment payments, you will be charged a fixed amount every credit cycle (every month) until the total payment is settled. If you want to settle the payment in advance, this fee will be charged to your credit card. This is usually done only in emergencies and I advise that installment payments be handled as such. Patience will pay off.

Returned Cheque Fee

If you pay your credit bill using a cheque, this fee will be charged if the cheque bounced. Please don't let that happen. You will not only have this fee but likely a late payment fee and interest charges too.

Sales Slip Retrieval Fee

If you must, it is possible to retrieve your credit payment slip (the one that comes out of the machine that reads your credit card). Keep your credit slips filed and secure to avoid this.

If you understand all that, maybe youwant tho get a card for yourself. You can apply at one of these websites. I did, and they all work!
https://www.moneymax.ph/credit-card
https://www.imoney.ph/credit-card
https://www.ecomparemo.com/credit-card

Thank you for reading my blog. Feel free to comment. I read all my comments.

*Some images here were just taken from the internet with the assumption that they are in the public domain. This blog was written with no intention of damaging anyone's public image, just sharing my opinion.

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