Avoid Credit Card Fees This Holiday Season

Black Friday marks the start of the holiday shopping season and I’m sure many of us will be stepping out to the mall and likely putting a few of those gifts on the old credit card. But, before you charge, please read on.

Many credit card companies are changing the terms of their contracts before the credit card reform laws go into effect in February. To help you manage your credit card balances and avoid getting pinged with fees that may be part of the changing terms, here are a few tips to protect yourself—and your credit.

Tip 1: Read the fine print!
You may not realize what terms and conditions have changed since you first signed up for your credit card so it’s very important to read the fine print. If you haven’t already done so, call your credit card company and request to have the latest summary of credit terms sent to you.

Tip 2: Make your payment early—and often.
Note your credit card due date and then try to make your payment at least a week in advance. A late payment is a sure–fire way to get hit with a fee. What’s worse? If you’re late, your card issuer could raise your interest rate to the default rate (which is typically the highest interest rate they can charge). In fact, to avoid this altogether, some experts even suggest scheduling two payments each month so that you can stay ahead of the game.

If you’re sending a check and you don’t think it will arrive on time, consider paying by phone. Though the credit card company will likely charge you a convenience fee (typically about $10), it’s still less than the late fee you’d receive if your payment was late by snail mail.

Tip 3: Set up automatic payments.
An easy way to stay on top of payment schedules is to sign up for automatic bill pay with your bank or credit union. Just remember to make sure you have enough money to cover the payment each month or you could end up with a double-whammy of charges: a late payment fee from the credit card company and a fee from your financial institution for insufficient funds.

Tip 4: Check your credit card limit—again.
A lot of financial institutions are tightening their lending practices because of this recession. As a result, you should double-check your current limit to make sure it hasn’t been lowered and you’re not accruing fees for going over the limit.

Tip 5: Beware of other fees.
Annual fees: If your credit card company charges an annual fee, ask to negotiate it. You could also select an alternative card that has a lower annual fee or even no annual fee at all. Be careful though—some cards charge borrowers an “application” fee just for signing up. The best way to avoid this is to check for this type of fee before you apply.

Balance transfer and cash withdrawal fees: Credit card companies often charge a fee if you transfer a balance from one card to another, or if you withdraw cash against a credit line. (Interest rates and fees on cash withdrawals are often higher than standard rates and fees.) Find out what the terms are on cash withdrawals and balance transfers so you can manage your balance and payments accordingly.

If you’d like to learn more about new credit card changes and how they will affect you, read our blog post “Sweeping Credit Card Changes Give Consumers Protection.”

We hope these tips will help you save some money on credit card fees—because wouldn’t that money be better spent on gifts for your loved ones?!

Happy holidays!