How to avoid paying unnecessary credit card fees

There are some cunning credit card holders who have managed to avoid paying out on unexpected credit card fees.

Most people will agree that these fees are too high, and equally that penalties are unfair. It is commonly known that banks and other credit card providers make significant amounts of money from these fees. Take last year for example, the Reserve Bank of Australia (RBA) saw a 12% increase in credit card fees compared with figures from the previous year, and by a staggering 170% when compared to 5 years ago.

The RBA also found that fees that came from common breaches of contracts such as exceeding credit limits, paying for transactions made abroad and failing to pay bills on time rose the fastest in 2007 by 16%.

These fees are easily avoidable, so you may be paying out unnecessarily. It is important to fully understand the wide variety of possible fees, giving you the best chance of steering clear. You are not locked into your credit card and it is possible to move your balance over to another credit card to avoid paying rates that sit over the odds, of inevitable fees that will be incurred for one of a number of reasons. For this reason, it definitely pays to compare credit cards to find the one that best suits your spending needs.

Below are a list of steps that you can follow to help you to minimise, or even avoid credit card fees:

Always pay your bill on time (at least the minimum payment) and remember that some online banking systems take a few days to process, so you could be counted as a late payment even if you carry out the transaction in time. Fee's tend to vary between $25 and $30, so it is recommended you set up a direct debit so the money is automatically paid off from your bank account to make absolutely certain that you are paid up on time.

When choosing a card, reduce the additional cards to the number you require. These are  supplementary cards that can be given to a family member of friend, but can add extra card fees on top of your bill, especially if the credit card is linked to a reward program.

By comparing credit cards you are able to decide how much annual fee you wish to pay. A no annual fee card will tend to have higher interest rates, sometimes with no interest free period, which means that your balance would be subject to interest as soon as a purchase is made. Alternatively you may have to spend over a certain amount to avoid the annual fee.

Cards that come with rewards programs often have higher annual fees than regular cards, so you need to find a balance between how useful the rewards are and how high the fee is.

A general rule of thumb is to stick to just one or two credit cards, as it makes everything far more manageable, such as monitoring bill dates and monitoring transactions. This will also help you to keep annual fees down.

Try to avoid using your credit card to withdraw cash. Cash advances generally begin accumulating interest on the day they are made, even with interest free days (these are for purchases only) and most banks will also charge a fee for each cash advance.

One of the key ways of avoiding credit card fees is simply by staying within your limit, as these are high charges that may be completely unnecessary. By keeping up to date on your balances and knowing exactly how much money you can use, you can always ensure you don't go over your limit. This can be done using internet banking so you can regularly check your account, or  you may prefer to use other banking facilities such as ATMs, telephone banking.