Americans are drowning in credit card debt. Credit card balances in the U.S. stood at $1.12 trillion in the first quarter of the year, according to the Federal Reserve Bank of New York.
Credit cards offer many benefits, such as helping you build a solid credit score, offering fraud protection, and giving you perks such as cash back points. But if you don’t use these cards well, you might spend hundreds or even thousands of dollars per year on interest and fees.
Here is how to avoid paying more than what you owe on credit cards so you can crush your debt and build your savings.
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Pay your balance in full each month
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A surefire way to never pay more than what you owe is to pay off the entire balance on your statement each month.
When you do this, you will not owe any interest and can avoid unnecessary costs and start building your net worth. Paying off all your debt each month may also help your credit score.
Ask your lender for a better due date
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Call your credit card issuer and ask the representative to adjust your due date. Swapping the day your bill is due might help align the date with your payday, which can increase the odds that you will pay on time and in full.
However, if your lender allows you to change the due date, don’t expect that you can keep changing the date throughout the year. Your lender might limit how often you can make such a change.
Watch out for the end of promotional offers
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Credit card promotional offers can be a great way to rack up rewards points or take advantage of a low interest rate when you make a big purchase.
Make sure to read the fine print, however. At the end of the promotional period, your interest rate could skyrocket. Put a reminder in your calendar to pay off the balance before the promotion ends.
Resolve $10,000 or more of your debt
Credit card debt is suffocating. It constantly weighs on your mind and controls every choice you make. You can end up emotionally and even physically drained from it. And even though you make regular payments, it feels like you can never make any progress because of the interest.
National Debt Relief could help you resolve your credit card debt with an affordable plan that works for you. Just tell them your situation, then find out your debt relief options.1
How to get National Debt Relief to help you resolve your debt: Sign up for a free debt assessment here. (Do not skip this step!) By signing up for a free assessment, National Debt Relief can assist you in settling your debt, but only if you schedule the assessment.
Make a balance transfer to a zero-percent credit card
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If you carry a large credit card balance from month to month, consider a balance transfer to a card that is offering a zero-percent promotional offer.
Take advantage of the promotional period to pay off the balance without accruing interest. It’s important to take steps to actually pay off all your debt on the card during this time. Once the promotional period ends, your interest rate likely will jump.
Don’t use cash advances
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Cash advances often come with hefty fees. Typically, the cash-advance fee starts at 5% or $10, whichever is more, according to Experian. But your lender might charge more.
On top of that, the annual percentage rate charged for cash-advance transactions is often higher than what you would pay for regular purchases.
Your lender also might start charging interest immediately. So, even if you pay off the advance in full by the statement due date, you might have accrued some interest that you will need to pay.
Say no foreign-transaction fees
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If you travel internationally or purchase goods from international vendors, a card with foreign-transaction fees is going to cost you. These fees are charged in addition to any interest or other charges you owe and are usually around 3% of your purchase amount.
To avoid this fee, find a credit card that does not charge foreign transaction fees on purchases.
Make your payments on time
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Forgetting to make a payment can happen to any of us. But if you do this regularly, late fees can add up to hundreds of dollars per year.
Currently, the average late fee is $32, according to the Consumer Financial Protection Bureau (CFPB). However, the CFPB is finalizing a new rule that will lower credit card late fees to $8.
Still, it is best to avoid these fees even if they are reduced. Also, it’s possible that a late payment will result in your lender increasing the interest rate on your card.
Skip cards with annual fees
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Credit card perks can be a big draw for some customers. But beware of the fact that lenders sometimes charge high annual fees to help cover the cost of these perks.
These fees can start around $100 and might even go as high as several hundred dollars. Before you sign up for a card with flashy benefits, check to see if the card has an annual fee and determine whether the benefits outweigh the costs.
Bottom line
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Inside the terms and conditions that come with your shiny new credit card is information about the interest and fees you might end up paying if you aren’t careful.
When used wisely, credit cards can be beneficial and can help you get ahead financially. To make the most of your credit card, read these terms and conditions and do what is necessary to avoid paying interest and fees.
Sign up for automatic payments, and try to pay off your balance each month.
Lucrative, Flat-Rate Cash Rewards
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Wells Fargo Active Cash® Card
Current Offer
$200 cash rewards bonus after spending $500 in purchases in the first 3 months
Annual Fee
$0
Rewards Rate
Earn unlimited 2% cash rewards on purchases
Benefits
- Low spend threshold for its welcome offer — $200 cash rewards bonus after spending $500 in purchases in the first 3 months
- Cell phone protection benefit (subject to a $25 deductible)
- Can redeem rewards at an ATM for literal cash
Drawbacks
- Foreign transaction fee of 3%
- No bonus categories
- Select “Apply Now” to take advantage of this specific offer and learn more about product features, terms and conditions.
- Earn a $200 cash rewards bonus after spending $500 in purchases in the first 3 months.
- Earn unlimited 2% cash rewards on purchases.
- 0% intro APR for 12 months from account opening on purchases and qualifying balance transfers. 20.24%, 25.24%, or 29.99% Variable APR thereafter; balance transfers made within 120 days qualify for the intro rate and fee of 3% then a BT fee of up to 5%, min: $5.
- $0 annual fee.
- No categories to track or remember and cash rewards don’t expire as long as your account remains open.
- Find tickets to top sports and entertainment events, book travel, make dinner reservations and more with your complimentary 24/7 Visa Signature® Concierge.
- Up to $600 of cell phone protection against damage or theft. Subject to a $25 deductible.