RentMoola makes it easy to maximize your rewards-earning power by paying rent using your credit card, but you could end up paying more than you bargained for if you’re not careful about fees. Here are five ways to avoid some of the most common credit card fees.
Many premium credit cards charge an annual fee. It may seem odd that you have to pay a fee to have a credit card, but the benefits offered usually offset that fee. Standard benefits include travel insurance, purchase protection, extended warranty, and much more. In many situations, the annual fee is worth it, but you need to look at the individual benefits offered by the card and see if you’ll actually use them.
That said, you could always apply for one of the best no fee credit cards. They may not offer as many generous benefits, but you could still get a few perks such as cash-back and zero liability protection.
Late payment fees
This may sound obvious, but you should always pay your bills in full and on time whenever your statements are due. If you don’t, you’ll be charged interest from the time you made your purchases. Most credit cards have an interest rate of 19.99%, so you’ll be paying a healthy premium if you’re not making full payments.
Another reason you’ll want to pay your bills on time is because it affects your credit score. If you miss two payments in a row, your credit score will drop dramatically and it’s likely your credit card provider will increase the interest rate on your account. At the very least, make the minimum payment to avoid this hit to your credit score.
Cash advance fees
Cash advances are always promoted as an easy way of accessing cash fast, but you should never treat your credit card like a debit card. Cash advance interest rates tend to be even higher than the interest rates you’ll be charged for making purchases. The rate hovers around 22%, so in other words; you’ll pay an additional $2.20 for every $10 you get from a cash advance. Clearly that’s a bad deal.
The reason cash advances appeal to some people is because you can get cash during emergencies. Sure that sounds great in theory, but a better idea would be to build up an emergency fund so you always have access to cash whenever you need it.
Foreign exchange fees
Some of the best travel rewards credit cards offer several benefits to help you save on travel, but oddly enough, most of them also a charge foreign transaction fees. What that means is you’ll be charged an additional 2.5% on top of the stop rate whenever you charge a foreign currency to your credit card. When you use your debit card to withdraw money from an ATM, you also pay that 2.5% fee, but don’t worry there is a solution.
One thing to note: if you’re prompted to choose between the local currency or your home currency when using your credit card, always choose the local currency since that rate is determined by Visa or MasterCard. If you were to choose your home currency, the merchant sets that rate, which can be inflated.
Balance transfer fees
If by chance you’re carrying a balance on your credit card, it may make sense to do a balance transfer to reduce the amount of interest you’re paying. Some cards charge a 2-5% balance transfer fee, but if your interest rate drops from 19.99% to 10%, that’s still a deal. However, some of the best balance transfer credit cards don’t charge a fee at all, so you’re better off applying for one of those cards instead of using one that does have a fee.
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Use our Rewards Maximizer to see what credit card is best for you when paying your rent.