Escaping Credit Card Fee Traps

It was bound to happen. As soon as the CARD Act shut the door on sudden interest rate hikes and other unfriendly consumer practices, the banks unveiled a new generation of fees. Here are three fees to watch for, and how to avoid them:

Activity Fee

Until recently, this fee was usually associated with preloaded gift cards that are popular during the holidays. If a person doesn’t use the card after an established period of time, the issuer would charge a monthly fee until it is used or the account balance is emptied. Now credit card issuers are jumping into the act and charging a fee if the user fails to charge above a minimum amount within a set period of time (usually a year). This fee can be as much as $100 annually.

If your card issuer imposes this fee, avoiding it could be a challenge. The best way is to set up a regular, automatic charge, like a gym membership or online video rental fee, which will help you meet the minimum annual usage requirements. To avoid interest fees, be sure to pay off the balance in its entirety before the due date.

Annual Fees

Annual fees are most likely to be required by credit card users who paying off their balances before interest rates can be applied since these are cardholders that pay the least for the credit. Now they may pay just to have an account, even if they don’t carry balance. It’s money for nothing.

There aren’t too many ways to get around this one. You can close the account and take your business elsewhere while causing your credit score to take a negative hit. If you want to avoid the dip in your credit score, you can keep the account open and try to negotiate the fee with the creditor. Some creditors have been known to waive or discount the fee, but results vary.

Paper Statement Fees

It costs credit card companies less than $1 to manufacture and distribute a new card to a customer. So you may be surprised that the same company may start charging you $1 each month for receiving a paper billing statement by mail.

Lucky for you, technology may be on your side. To avoid paying for paper and postage, you should check with your credit card issuer and see how you can replace paper with e-mail. Getting your statement electronically may help you avoid the fee, and help the environment by eliminating paper waste. Save green and go green all at once!

Clearpoint has been helping consumers with their personal finance goals and debt repayment strategies since 1964. Today, we work with consumers all over the country through counseling that is administered online, in person or over the phone. Learn about our services today!

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