In part one of this series, we talked about some of the common fees that might be charged to your credit card account. But there are two important ones that we’ve saved for you: cash advance fees and balance transfer fees.
Be sure to check your account terms and figure out what fee (if any) you’ll be charged for a cash advance or balance transfer before you make one of those transactions – especially if you’re trying to stick to a budget.
Cash advance fee.
You’ll incur a cash advance fee on most cards whenever you use your credit card to access cash – for instance, when you withdraw cash from your credit account by using your card at an ATM.
A cash advance fee is usually charged as a percentage of the cash advance, usually with both a minimum and maximum amount, so you’ll want to keep this fee in mind to help you decide if it’s worth it for you to use your credit card to access cash – especially considering that cash advances are sometimes subject to higher interest rates than purchases you make with your card.
Balance transfer fee.
If you have multiple credit cards, you may decide to move your balance from one card to another card – maybe because that other card has a lower interest rate or maybe just so you can consolidate multiple balances to help keep track of what you owe. This is what we in the credit card business call a balance transfer.
Banks often charge a balance transfer fee which can be a percentage of the balance you transferred. This means the higher the balance you transfer the higher the dollar amount of the fee you’ll pay. But, if a lower promotional interest rate is offered to transfer your balance, the fee might be well worth paying.
And now you know.
You’ve got the lowdown on credit card fees now. The next time you’re thinking about making a balance transfer or withdrawing cash from your credit card, double check your account terms and make sure you’re well aware of any associated fees.