No matter how much we hate credit card fees, we all pay them.
You don’t have to spend a fortune on credit cards. You can avoid some fees entirely if you know how they work.
But you must be aware of these fees to avoid them. Below are a few of the most common.
1. Foreign transaction fees
If you purchase outside Canada with your credit card, some card charge you a foreign transaction fee. Usually, this fee ranges from 0.5% to 3% of the amount you spend.
How to avoid foreign transaction fees
Choose a credit card with no foreign transaction fees, like the Scotiabank Gold American Express. Click here for the full Scotiabank Gold American Express review.
2. Late payment fees
Most credit cards charge late fees. Late fees may apply if you do not pay your credit card balance on time. Not all cards will charge you for a late or missed payment, but if you have a card that does, it can add an extra sum to your balance. Late or missed payments can negatively impact your credit score.
How to avoid late payment fees
Make sure you consistently pay your credit card balance on time. By doing this, you can establish a positive payment history, one of the most important factors in determining your credit score.
3. Cash advance fees
A cash advance might look like a good way to get fast cash, but they come at a high price. Fees for cash advances are usually 3% or 5%, which can increase significantly if you take hundreds of dollars.
How to avoid cash advance fees
Consider a personal loan rather than taking out a cash advance. Alternatively, you can borrow from friends and families.
4. Annual fees.
Most credit cards charge an annual fee just for owning the card. This fee can range from $99 to over $650. In most cases, you’ll have to pay the same annual fee every year; however, some cards like the Scotia Momentum® VISA* Infinite card waive the fee for the first year.
How to avoid annual fees
A card without an annual fee is the best way for you to avoid paying one.
Tangerine Money-Back Credit Card and MBNA Rewards Platinum Plus® Mastercard® are the best no annual fee credit card we recommend for those looking to earn cashback.
However, do not let an annual fee turn you away from a credit card. The additional benefits can make the credit card annual fee worthwhile if you use it often.
5. Balance transfer fees
Transferring high-interest debt to one with a low APR is an effective way to save money. A balance transfer fee of up to 5% will generally apply when you transfer a balance from one card to another. As a result, you will accrue more debt, so you should do the math to make sure you are saving money.
How to avoid balance transfer fees
Some cards like the Scotiabank®* Gold American Express® Card do not charge a fee for transferring a balance for the first six months. So consider one of those options if it works for your situation.
In conclusion
Credit card fees aren’t the most exciting thing to talk about, but being aware of these fees and how to avoid them can save you a lot of money.