Avoiding High Credit Card Fees

Watch out for over-limit credit card fees, penalty fees, annual fees, and more.

Most people are aware that interest rates can make credit card use very expensive. But many people are unaware of the other big expense in using a credit card -- fees. Fortunately, if you choose your card well and use your card carefully, you can avoid most or all of expensive credit card fees.  

(To learn how to shop for a credit card, visit our How to Choose a Credit Card topic area.)  

Over-Limit Fees

Your credit card will come with a credit limit -- the maximum amount of credit that will be extended to you. In the past, if a particular credit card charge would put you over your credit limit, the transaction would be rejected. If you wanted to make a charge that would put you over the limit, you had to pay down your balance first.  

In recent years, credit card companies allowed customers to make charges that put them over the limit. Of course, this convenience did not come free -- the companies charged hefty fees for over-limit charges, and usually did not tell customers that they were going over the limit.    

This changed somewhat with the enactment of the Credit Card Accountability and Disclosure Act of 2009 (also called the CARD Act). (To learn more about the CARD Act, see The Credit CARD Act: More Protection for Cardholders.)  

No fees unless you opt in. Under the rules of the CARD Act, a credit card company cannot charge over-limit fees unless you “opt in,” that is, agree in advance that the company can allow transactions that would put your balance over the credit limit. Even if a credit card company processes a transaction over your limit, if you did not opt in, the company cannot charge you an overâ

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