Choosing the Right Credit Card to Reduce Credit Card Fees You Pay

November 26, 2011

Credit cards are often seen as the financial “enemy”, because of the tendency for people using them to spend more than they can afford to repay. Despite this bad reputation, when you choose the right credit card in the first place, and use it responsibly – it can become a great financial management tool that can actually help you save money, earn rewards, and improve your credit. Here’s how to choose the right card and reduce the credit card fees you pay:

Choose a Rewards Card With Care: changes to the credit card industry have made rewards programs slightly less rewarding than they once were. If you want a credit card that has a rewards program, you need to choose one that earns rewards based on how you will actually use your credit card. It will not do you any good to get a rewards card that earns 5% cash back on travel related purchases if you only travel once every four years! Once you find a credit card with a rewards program that earns rewards based on how you will use a credit card, actually take the time to calculate how the rewards are earned and what you are likely to earn. Don’t just take the advertisement for the credit card at face value: figure out how much you have to spend on the card to earn the reward, add in the annual fee if there is one, and determine whether you are actually earning a reward or if you’re paying extra in order to get the rewards points or cash back.

Look for Optional Credit Card Fees: when looking at various credit cards, keep in mind some of the fees are actually “optional”. You do not need to sign up for the payment protection plan that many credit card companies offer, and there is a good chance the insurance program is a waste of money, anyway. If a credit card charges for mailed statements, choose to receive your statements by email or look for a card that doesn’t charge for mailing a statement each month. Don’t pay for any credit card fees that are optional.

Look for Fees that Don’t Affect You: some credit cards will charge inactivity fees for not using the card for a certain length of time, or charge foreign transaction fees when using your card out of the country. If you plan to use your credit card regularly and don’t go out of the country – neither of these credit card fees should concern you or be considered when you are comparing credit card offers.

Using Your Credit Card Responsibly

Once you have chosen a credit card with the fees and rewards programs in mind, it’s important to use the credit card responsibly to avoid any other, unnecessary credit card fees. It won’t matter how great your credit card is if you spend more than you can afford to repay – the interest and late fees will quickly add up! Responsible credit card use involves:

Paying Credit Card Bill: keep your credit card purchases affordable, so you can pay the bill in full each time you receive the credit card statement. Pay it before the due date and you will not only improve or maintain a good credit score, but you’ll avoid paying interest on credit card purchases and avoid late fees.

Monitoring Credit Card Statements: always review your credit card statement when it arrives to make sure only your purchases appear on the list (and contact your credit card company immediately if there are any purchases you did not make appearing!) By monitoring your statements closely, you’ll also know if there are any fees you’re being charged that should not be on your statement and can have them removed promptly.

Posted in Credit Cards