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5 Credit Card Fees to Watch Out For

, by Rob Kaufman

Credit cards are essential for many reasons. They can help you establish credit (good for your credit score) and even help you out of a bind when you reach into your pocket and realize you don't have enough cash. However, many people find the problem with credit cards are their associated fees.

Here are 5 very common credit card fees you want to watch out for and possibly avoid.

1. Annual Fee

An annual fee is usually charged merely for the "convenience" of having a particular credit card. Check your current credit card yearly statement to see if you pay an annual fee. Not all cards charge an annual fee, but if your credit card is secured, offers rewards or is a subprime card, you probably do pay an annual fee.

The amount of the fee varies per card, and most financial experts (including the Consumer Financial Protection Bureau) advise to calculate if the benefits of the card outweigh the annual fee. For example, do you pay a fee of $75 per year, yet receive money back or rewards worth five times that amount? If you do, then it's worth the cost. Are you trying to build your credit and have to pay an annual fee to strengthen your credit score? It might be worth the fee. The decision is up to you and the cost versus reward you receive.

2. Cash Advance Fee

First of all, what is a Cash Advance Fee? When you use your credit card to withdraw money from an ATM or cash a convenience check from your credit card, you're taking out a cash advance. Banks will charge you for this cash advance - typically 3 to 8 percent of the amount advanced. Two other things to watch out for when taking out a cash advance: the fees are frequently charged at a higher APR than regular purchase. Interest charges can start on the day you take out the cash advance, unlike regular purchases that give you a grace period.

3. Late Fee

The title of this fee is self-explanatory: don't pay your bill on time and you'll get hit with a fee. If you pay late or provide a payment less than the minimum payment due, you'll most likely have to pay a late fee of up to $38. The Consumer Financial Protection Bureau says that the late fee can't be more than the minimum amount due. So, if you do get a late fee, check to make sure it isn't more than that minimum amount. Better yet, pay the full minimum payment or total amount due, and you won't even have to worry about a late fee.

4. Over-the-Limit Fee

You actually opt-in to this type of fee, which gives the credit card issuer permission to allow you to charge more than your credit limit in exchange for a fee. Credit card companies are limited to charging $25 the first time you exceed your credit limit and $35 each time you exceed it within the next six months. The fee can't exceed the over-the-limit amount you charged. There are two ways to avoid this fee: always keep your credit card balance below its credit limit or opt-out of giving the creditor permission to charge this fee. However, remember that opting out of this fee means any transactions exceeding your credit limit will be declined.

5. Balance Transfer Fee

So... you want to move the balance of one credit card to another. You didn't think that that would be free, did you? Typically, it's not. Most balance transfer fees are 3% of the transaction amount or $5, whichever is higher. Some credit cards offer a 0% APR on balance transfers (for a short "introductory" period). However, they still may charge a balance transfer fee. So check out all the terms (and fees) before deciding whether a balance transfer is right for you.

myFICO customers have paid their share of fees... some willingly, others not. Check out the myFICO forum to see how they handled (and sometimes avoided) these fees.

Rob Kaufman

Rob is a writer... of blogs, books and business. His financial investment experience combined with a long background in marketing credit protection services provides a source of information that helps fill the gaps on one's journey toward financial well-being. His goal is simple: The more people he can help, the better.