How to Avoid Fees on Rewards Credit Cards

avoid fees rewards card

How to Avoid Fees on Rewards Credit Cards

Rewards credit cards can help you earn everything from free airfare to hotel stays, free merchandise, and even cold, hard cash. But are those perks really “free?” Maybe. The problem is, it depends on a wide range of factors. For starters, each rewards card is unique, with its own fees, interest rate, requirements, and scroll full of fine print. Because of this, even credit-savvy consumers can be confused and end up paying fees unnecessarily.

Credit Card Fees to Watch Out For

But it doesn’t have to be that way. As always, learning as much as you can is the best way to avoid paying unwanted fees and maximize the value of the rewards you’re trying to earn in the first place. Here are a few of the fees that often accompany rewards credit cards and how you can avoid them:

  • Annual Fees- Some of the most lucrative rewards credit card offers come with hefty fees that can cancel out much of their value. However, many of the best rewards cards don’t have an annual fee at all, or offer to waive the annual fee for the first year. Before you sign up, make sure you choose a card that is free to own, at least for the first year.
  • Late fees-  Paying your credit card late could mean getting hit with a huge late fee for the privilege, and even paying a higher interest rate as a result. To avoid this messy situation, always pay your bills on time. Write it on your calendar if you need to, or set up an alert on your phone for an extra measure of protection.
  • Balance Transfer Fees- Credit cards often charge balance transfer fees for those who choose to move a credit card balance from an old account to a new one. The fee is often equal to 3% of the balance transferred, although it can sometimes be more. Obviously, you can avoid this fee altogether by not transferring a balance from one card to the next. Furthermore, many experts would argue that you should not pursue credit card rewards if you’re carrying any consumer debt in the first place.
  • Cash Advance Fees- Most issuers charge a fee if you use your credit card for a cash advance. The easiest way to avoid this fee is obviously to avoid taking out loans in the form of a cash advance to begin with. Instead, build a healthy emergency fund and start saving for the little things that inevitably pop up.

The Importance of Reading the Fine Print

Rewards credit cards can provide thousands of dollars in value if utilized properly, but they can also get you in serious trouble if you don’t have experience managing your credit. When it comes to signing up for a rewards credit card (or any credit card for that matter), the best way you can protect yourself is to read all of the fine print before you sign up. Pour through the details of the offer and make sure you fully understand any fees you could incur and, most importantly, why.  And, most importantly, make it a point to pay your entire credit card balance in full and on time every month.

If not, the rewards you are seeking could actually cost you.



Holly Johnson is a wife, mother of two, and frugal lifestyle enthusiast. She is the co-founder of frugality site Club Thrifty, and travel site Travel Blue Book.  Holly is also a staff writer at Get Rich Slowly, Frugal Travel Guy, and U.S. News and World Report's "My Money Blog." Holly has been featured in the Wall Street Journal, Kiplinger Personal Finance, Fox Business, and Daily Finance.