Avoiding Credit Card Fees
Credit cards definitely have their perks and place in our wallets. However, they do come hand in hand with that nasty, annoying and often expensive thing called fees! Credit card fees can quickly add up and cost you big bucks but the good news is, you can avoid them. It’s a good idea to familiarise yourself with the following credit card fees then read through our all-important tips to avoid them.
Most common types of credit card fees
Annual fee: Each year you may be hit with an annual fee, which can range from $30-$700, depending on the type of credit card you own. The more features a card has such as a rewards card, the higher the annual fee. If you’re not taking advantage of all the benefits that are linked with your card you should consider looking at a low fee credit card that doesn’t have an annual fee.
Cash advance fee: This is the fee you’re smacked with when you use your credit card to withdraw money from an ATM. You’ll get charged a withdrawal fee of around 3% on the amount you take out plus your provider will start charging you interest on that money which can be as high as 20%. Unlike purchases, interest free periods don't apply for cash advances. To avoid this expensive fee, only make a cash advance in cases of emergency.
Late payment fee: If you don’t pay your monthly credit card payment by the due date your provider will slap you with a late fee. This fee can be between 0-$30 on top of the interest that you will be charged.
International transaction fee: While it’s convenient to use your credit card when travelling overseas it can also cost you a lot of money! Every time you make an overseas purchase on your credit card, you’ll be charged a currency conversion or foreign exchange fee. The fee can be as much as 4%, depending on what type of credit card you have. If you’re planning a trip overseas, head over to our travel money section of the site so you don’t return home from your trip with a massive credit card bill. Take note, you don’t have to be abroad to receive an international transaction fee. If you make a purchase online and the merchant is located overseas than you’ll still be hit with a currency conversion fee.
Credit card surcharge: Some business may charge you a ‘surcharge’ for using your credit card. This is usually a percentage of your purchase amount.
Over limit fee: A few providers may charge you for exceeding your credit card limit in a statement period.
Fee for using an ATM that doesn’t belong to your provider: If you use an ATM that isn’t linked to the financial institution of your credit card to get money out or check your balance than a fee will appear on your statement.
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No annual fee card comparisons - page last updated October 24, 2020
American Express Qantas Discovery Card
American Express Qantas Discovery CardDetails
Bankwest Zero Platinum Mastercard
Bankwest Zero Platinum MastercardDetails
St.George No Annual Fee
St.George No Annual FeeDetails
American Express Velocity Escape Card
American Express Velocity Escape CardDetails
BankSA No Annual Fee
BankSA No Annual FeeDetails
Tips for avoiding or minimising credit card fees
1. Set up an automatic payment plan – this way you’ll always pay your credit card bill on time, avoiding a late payment fee.
2. Avoid ATM’s – always stash some cash in your wallet to avoid using your credit card to withdraw money from an ATM. Your provider can hit you pretty hard with a cash advance fee for taking money out using your credit card.
3. Stick to a budget - if you remain self-disciplined with your credit card and don’t over spend you’re more likely to avoid exceeding your credit card maximum and being slapped with an over limit fee. If you’re a big spender keep an eye on your purchase history by regularly viewing your account online.
4. Give your annual fee the flick – if you’re not reaping the benefits from your rewards card, get rid of it and find a low fee credit card that doesn’t have an annual fee.
5. Shop, shop, shop – take the time to compare and save on credit cards and find one with minimal fees, there are plenty out there!
6. Pay at least the minimum amount on time – when it comes to paying your bill, at the very least pay the minimum amount owing. Of course paying the full amount will save you money in the long run and you’ll be out of debt a lot quicker. But by paying the minimum amount on time you’ll dodge a late payment fee.
7. Go paperless – each time you ask you request an additional paper copy of your statement, your provider will charge you. Save money and jump online to check your statement.
Jane has decided to have a good look through her credit card statement as the balance owing seems to be quite a lot more than what she had budgeted for. Throwing unnecessary money back at the bank is the last thing she can afford right now, as she’s saving for a deposit on her first home.
While disciplined when it comes to spending, Jane can be forgetful sometimes! Looking through the card statement she realises she was hit with a $25 late payment fee after paying last month’s bill a few days after the due date. Jane also notices a $250 annual fee for the frequent flyer credit card she isn’t even that happy with, flying and her don’t agree.
To avoid the hefty annual fee, Jane takes the time to shop around and compare credit cards on the market to find the best deal on a low fee card. Jane is elated, as she has found a card with $0 annual fee and $0 p.a. on purchases for 15 months. Winner! She has saved herself $250 already.
Next step for Jane in saving money by avoiding credit card fees is to set up an automatic payment plan. This way, she can rest assure she’ll avoid being hit with a late payment fee. She sets up the direct debt to coincide with her work pay and thus will always pay her credit card bill on time.
Jane has just saved herself nearly $300 by switching credit cards and setting up an automatic payment plan for her monthly bill. It’s that easy!
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