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Credit Card Debt Elimination Tips: The Top 5 Fees You Can Avoid

Jun 16, 2008
Are you buried in credit card debt? One way to reduce and eliminate your debt is to avoid unnecessary fees that can really add up and compound, causing your balance to become unmanageable. Learn to avoid these fees and get debt free.

Many people are simply unaware of all the potential charges and penalties that can be incurred by seemingly ordinary credit card use. After all, the credit card terms and conditions are very long and very confusing - how many of us ever actually read these terms or the seemingly endless flow of revisions to the terms that come in the mail?

However, if you are committed to eliminating your debt, then you really need to make sure and avoid the following fees, as they add up quickly and may end up negating your efforts to pay down your balance.

1. The Declined Check Fee (or Declined Payment fee)

This fee is easier to incur than ever, thanks to automatic electronic payments. Even if you use the same bank for your credit card and banking accounts, it's still easy to have this penalty applied if you have recurring payments set up and you keep most of your cash in an interest-bearing savings account. If you do so, be careful to always add cash to your checking account several days before the recurring payment will be charged and also set up overdraft protection that will automatically transfer funds in the event that your checking balance is too low. Such overdraft charges are not cheap, but they are usually less than declined payment fees, and they will save you from incurring a higher credit card interest rate.

2. Annual Membership Fee

There is simply no reason to fork over this annual amount to a credit card company when there are so many cards available that charge no annual fee at all. Even American Express now has a card available with no annual fee.

3. Cash Advance Fees

Nowadays, cash advance fees can run as high as 5% of the transaction or more. You are often far better off juggling your finances so that you use your card to charge items for which you normally pay cash, then take the money you save and use that in place of a cash advance. Doing so can save you hundreds of dollars in fees and interest -- usually, cash advances incur much higher interest rates than purchases too, so the cost is not only in the short term transaction fee but in long term interest payments as well.

4. Over The Credit Limit Fees

This is perhaps the silliest and most annoying fee of all. Imagine charging your customers for doing the very thing you encourage them to do - use your product! Well, that's exactly what most credit card banks do. So if you are anywhere near your credit limit, make sure you either call your bank and request an increased limit (which they often will gladly grant you) or use a different card altogether.

5. Late Payment Fees

You really have to be extra careful with these fees now. Credit card banks will often levy these fees if you are so much as a day late. Worse yet, they will often raise your interest rate as well for one late payment. If you do receive a late charge, always try calling and having it removed. Doing so might save you a chunk of change now and a much larger amount down the road -- by avoiding higher interest rates.
About the Author
Scott Russell is a writer, consultant, and editor of debtconquest.com, where you can find information on eliminating credit card debt , debt negotiation, and avoiding bankruptcy.
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