How to avoid credit card fees

How to avoid credit card fees

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When used correctly, credit cards can be extremely useful. The best credit cards come with reasonable interest rates, plus a range of rewards just for using them. However, failing to stay on top of your credit card charges may land you in big trouble, as some have hidden credit card transaction fees that are easy to miss.

By knowing what to expect, you can avoid getting caught out. In this article, we're going to take a look at some of the fees that come with using credit cards, so you don't end up with any nasty surprises down the line.

Common credit card fees

Most unexpected credit card processing fees you'll receive will be from actions outside the normal scope of your spending. Think missing a payment, or going over your limit, for example. Some of the most common causes of credit card fees include:

Interest ratesYou'll be charged interest if you don't pay off your balance each month. Your APR (annual percentage rate) will tell you your rate of interest. Your APR can change between billing cycles, so it's best to make sure you know how much you'll be expected to pay on your next bill.

Balance transfer feesMoving debt from one card to another can be costly. Doing so can incur a charge of between 3% to 5% per transfer, often with a £5 or £10 minimum.

Annual feesMany credit cards will charge you just for ownership. This fee, which is charged annually, can range anywhere from £70 to more than £400. While this fee usually stays the same, some credit card companies will waive it for the first year.

Foreign transaction feesBuying outside of the UK? You may be charged up to 3% of the price of your purchase. Certain cards have features for international travel, which can save you money when spending abroad.

Cash advance feesWhile cash advances can be attractive, they are a costly way to get access to cash. With a 3%-5% fee for each withdrawal, using your card for this purpose can quickly add up.

Late payment feesIf you don't pay your bill on time, you'll usually have to pay around £12. Bear in mind that this is only for the first time you miss a payment - anything after this is usually more expensive.

Over limit feesYour card company can charge you up to the amount you've gone over your limit by, but not anything more. This type of charge is less common - in most cases, if you attempt to spend more than your limit, your card will be declined.

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How to avoid credit card fees

There are a few simple steps you can take to avoid paying fees on your credit cards. These include:

Paying off your credit card balance on timeKeeping up to date on what you owe is an easy way to minimise risk. If you're unable to pay the full amount, pay the minimum at the very least. Setting up a direct debit can help with this.

Paying straight after paydayA useful hack is to set your payment due date to the day after you get paid. This way, you don't have to worry about if you can afford to pay your card bill.

Knowing your credit limitBe aware of your credit limit and manage your spending accordingly. Use banking apps to keep an eye on your outgoings; you can even arrange for your credit card company to send you alerts, such as text messages, to notify you when your limit is approaching.

Get a specialised travel credit cardAs we mentioned before, having a card that lets you spend abroad can save you a tonne of money overseas. With these types of cards, you can also get much better exchange rates.

Use other methods of paymentIf you're worried about racking up credit card fees, using other methods of payment is a viable solution. This could mean using cash, debit cards or even prepaid cards instead.

Do a bank transferIf you have the funds available in your account, it makes sense to do a bank transfer instead of using your credit card. This way, you can avoid spending more than you can afford and you'll avoid any interest or fees. With iwocaPay, your customers can send funds from their bank to yours in just a few clicks.

Avoid card fees with iwocaPay

iwocaPay makes it a no-brainer for customers to do business, with free payment processing on instant purchases. Using our Pay Now feature, customers can send secure payments from their bank to yours - with no waiting, no interest, no fees, and no hassle.

We all know how cumbersome sending bank transfers can be - having to set up payees, verify details and then having to wait for the money to arrive.

With Pay Now, you can receive your funds immediately, ready for whatever you need them for. If your customers can't pay off their balance right now, offer them flexible payment terms that are fitting for both parties.

At iwocaPay, we decided that getting paid shouldn't be difficult - or expensive.

Words by
Miles Warner
Article published on
January 24, 2023
Last reviewed on:
December 11, 2023

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