When Credit Card Fees Go Sky-high

While a whole range of charges associated with credit card use is not a surprise any more, the way they are sometimes applied may confuse a not too knowledgeable consumer. What hurts most is the consequence which might come up to a damaged budget at best and ruined credit at worst. The fine print is a great source of information on all the charges and terms they are applied under, but one needs to be financially educated to understand a point there.

If you're looking for a proper card offer right now, or you're already holding a plastic, the following information will be of prime importance for you, especially as the recent changes in the market require new and more rational behavior.

APRs and fees are inevitable when it comes to making a purchase, whether online or at a local store. Transaction, or interchange, fees are applied each time a merchant accepts and processes your Visa or MasterCard. Annual fee is just what you have to pay under the agreement, as well as the late fee and other penalty charges once you default on the agreement.

One of the heftiest charges is imposed when you take out a cash advance against your credit line. When you withdraw cash with your bank card through an ATM, you start accruing a higher-than-normal interest rate from the first date of the transaction. You also pay the so-called cash advance fee, which might be a fixed amount or a percentage of the amount withdrawn. In either case you know what kind of fee and why you are required to pay, as it is specified in the fine print. There are a number of cases when a cash advance fee is applied to transactions that are not related to ATM withdrawals.

It is especially actual for travelers to Europe. Most of us can't imagine going abroad packed full with hard cash. That is when a plastic card, preferably with a low or no foreign exchange fee, comes in handy. But the recent introduction of "smart" PIN-based cards in Europe made the requirement of the PIN use equally applicable to Europeans and Americans. That means each time an American consumer enters the PIN into the reader, the transaction is rated as cash advance and entails the associated higher APRs and fees. Visa International and MasterCard are working out the rules to protect American consumers making purchases in Europe.

Another time when you may face a cash advance fee is when you make a balance transfer from your current account to a lower APR card. You are not specifically notified of it, so you need to study the fine print in every detail to get it.

Then, your bank may get you on the hook sending you a convenience check, presenting it an easy and fast way to pay a bill or get extra cash. Be sure, the same high interest rates and fees will apply from the first day you activate the check.

And the least expected thing that may cause a cash advance fee to appear on your monthly statement is paying utility or cell phone bills with your plastic at an ABM or by Internet.

Mind these peculiarities once you go for a credit offer online or get it in the mail. It makes sense to study and compare the offers available to avoid the unnecessary sky-high charges at the time of the more expensive and less accessible credit.

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