Hidden fees of financial products, part 2
Last month we looked at the hidden fees of bank accounts. Join us this month on the second part of our update as we uncover the hidden fees associated with credit cards.
Credit card fees can vary significantly among financial institutions and even across different types of cards from the same company. To help you understand some of the common fees, we recommend reading the following information:
While not exactly hidden, some credit cards charge annual fees for the privilege of having the card available. Be aware of any associated annual fees with your credit card.
Balance transfer fees:
When transferring a balance from one credit card to another, some cards may charge a balance transfer fee. This fee is usually a percentage of the amount being transferred.
Cash advance fees:
Some credit cards charge a fee for cash advances, which occur when you withdraw cash from an ATM using your credit card. This fee is often a percentage of the amount withdrawn, and you may also have to pay a minimum charge.
Card replacement fees:
If your credit card is lost or stolen and needs to be replaced, some issuers may charge a fee for providing a new card.
Credit card insurance fees:
Some credit cards offer insurance products, such as payment protection insurance. These often come with additional fees. Make sure you understand the terms and costs associated with any insurance products linked to your credit card.
Copy statement fees:
If you need additional copies of your credit card statements, some issuers may charge a fee for providing these copies.
Foreign transaction fees:
When making purchases in a currency other than the British Pound, some credit cards may charge a foreign transaction fee. This fee is usually a percentage of the transaction amount.
Late payment fees:
Failure to make at least the minimum payment by the due date may subject you to late payment fees, which can vary dependent on the provider. Late payments on your credit card could negatively impact your credit file.
Exceeding your credit limit may lead to overlimit fees. Understand your credit limit and monitor your spending to avoid these fees. Please be aware that using your credit cards to the maximum limit or exceeding your credit limit could negatively impact your credit score. Fortunately, by decreasing the outstanding balance on your credit card, your credit score could improve.
It is crucial to understand the fees associated with products you hold, such as any of those detailed above. As consumers, gaining a clear understanding of these terms helps us to make informed financial decisions.
Stay tuned for next month’s edition, where we’ll conclude our three-part series looking at hidden fees associated with mortgages.
|Subscribe to our monthly “Let’s talk about money” newsletters here!