When your credit card bill arrives and you open the envelope, you might enter a state of shock after seeing that your total balance for the month. Aside from the principal, you will also see several fees that skyrocketed your bill to an unexpected amount. Credit cards offer unparalleled convenience—at a certain price, of course. While there are laws that protect credit card owners from exorbitant and/or hidden fees, knowing the fine print of your banking statement can help you dodge some of the fees. To better equip yourself with the knowledge on how banks charge you for your cards, here are the most important credit card fees you need to know.
A credit card’s annual fee is a payment charged by the credit card provider for the use of the credit card. Regardless of how often you use your credit card, banks will still bill you for annual fees for having the convenience of the credit card. Usually, annual fees in the country range between PHP 500 to PHP 5,000 depending on the level of the card issued to the user (classic, silver, gold, platinum). If you want to avoid paying the annual fee, you can talk to your bank and see if they can waive the fee for you. More often than not, they waive the annual fees just to keep their customers satisfied.
Cash advance fee
Applicable only if you make a cash advance using your credit card, this type of fee imposed on clients who made cash withdrawals using their card. Banks typically charge a minimum fee or a percentage of the cash advance, depending on which is higher. Since cash advance fees tend to be higher than other charges set by the bank, you should only make withdrawals with your credit card in case of emergencies.
In certain cases where you reach you reach your credit limit and you still need to use your card, you can go over the edge and use your card even if you’ve maxed out—for a fee, of course. Known as over-the-limit fees, you will be charged a certain amount for every transaction done in excess of your assigned credit limit.
Late payment fee
When you fail to pay your bill before the due date indicated on the statement, banks will account this fee in your bill next month. Banks typically charge a minimum fee or a percentage of the past due amount, whichever is higher. To avoid this, you need to be religious with your payments and settle your balance on time.
Supplementary card fee
Just like the annual membership fee, banks charge clients with supplementary card fees for the convenience of using the said card. The supplementary fee is always lower than the annual fee paid by the principal cardholder, in rare cases lower than half of the principal’s annual fee.
Returned check fee
When you try to settle your account with a check and it returned for certain reasons, banks will charge you with a returned check fee for the inconvenience caused by the dishonored check. The amount charged by banks for the returned checks vary according to their discretion.
Currency conversion fee
Also known as foreign transaction charge, credit card companies bill you for using your card and converting those charges to other currencies. Whether you use it directly when you’re overseas or make online transactions that use foreign currencies, you will still be charged with this fee for every transaction.
Balance transfer fee
The balance transfer is the act of moving your existing credit card debt from an existing account to a new one, thus allowing you to avail lower interest rates and better payment terms. While this may benefit those with an outstanding balance in the long run, banks charge a flat rate or a certain percentage for every transfer made.
Card Replacement Fee
Applicable only when customers who lost their cards and went through the entire reporting procedure, card replacement fees are charges imposed to the users for the issuance of the new card.
Keeping track of all the fees may be a difficult task, most especially for first-time credit card holders who just received their plastic. However, knowing the fees listed on your billing statement will help you make better decisions by knowing which services require extra fees and whether these fees are worth it.