Tips to help minimise credit card fees

Tips to minimise credit card fees

Whether it's a cash advance fee, foreign transaction fee, or late payment fee, credit card fees can add up quickly and create unnecessary financial burdens. While not all credit card fees can be avoided – you are borrowing money, after all – there are some handy ways to minimise fees and help you save money.

Annual or monthly fees

Annual or monthly fees are charges for using your credit card. These fees depend on the type of card and its rewards.

Annual fees can sometimes be avoided by choosing a card with low or no annual fee. For example, the Westpac Low Fee credit card offers no annual fee as long as you meet the minimum spend each year and pay off your balances by the monthly due date. 

Interest

Interest is charged when you carry a balance on your card. If you don’t pay your balance in full by the due date, interest will be charged on the remaining balance. To minimise these fees, try to pay off your balance in full, rather than just making the minimum repayment.

Plus, you might want to take advantage of any interest free periods and make additional payments to help reduce your balance faster. It’s possible to make payments before your statement period ends to help reduce your balance and stay within your credit card limit.

Low interest rate credit cards could also help reduce the amount of interest you pay. You could consider transferring high interest balances to a card with a balance transfer offer on low rate credit cards.

Missed and late payment fees

Missed and late payment fees are charged when you fail to make at least the minimum payment by the due date on your statement. Not only are these fees an additional cost, but they can also impact your credit score.

To avoid late payment fees, you can set up reminders to make payments on time or set up automatic payments to pay off your account every month. With Westpac’s Card Autopay, you can choose to pay off the closing balance each month, the minimum payment due, a fixed dollar amount, or a percentage of the closing balance on your credit card. 

Cash advance fees

Cash advance fees are charged when you withdraw cash at an ATM using your credit card. You’ll also be charged these fees when you make cash equivalent transactions, such as gambling, buying lottery tickets or purchasing foreign money. As well as a cash advance fee, the interest rate on cash advances is almost always higher than the regular purchase interest rate, and there are no interest free days when it comes to withdrawing cash on your credit card.

To minimise cash advance fees, try to avoid using your credit card to withdraw cash by using alternative sources. This may mean having an easily accessible emergency savings fund available.

International transaction fees

An international transaction fee is charged for purchases made in foreign currencies or through overseas merchants.

This fee is a percentage of the Australian dollar value of any foreign transaction, whether you’re shopping online at a foreign merchant, or in-store in a foreign country.

To minimise these fees, look for credit cards with low or no foreign transaction fees, such as the Westpac Lite card.

Balance transfer fees

A balance transfer fee may be charged when you transfer the balance from one credit card to another. 

To minimise balance transfer fees, look for credit cards that offer no balance transfer fees throughout promotional periods. It’s also wise to ensure what you’ll be saving from the lower interest rate outweighs any balance transfer fees.

To sum up

By being aware of the various fees attached to your credit card as well as how to minimise them, you could reduce, or ultimately avoid paying unnecessary costs associated with owning a credit card, helping you save money.