6 Fees to Watch Out for When Applying for a Business Credit Card
So you're in the market for a new business credit card, huh? Well in addition to ongoing interest rates, 0 percent introductory periods and rewards programs, there's of course one important category to consider: fees.
Credit card fees have been largely reined in and made more transparent since the passing of the 2009 Credit CARD Act, but they of course still exist and can wreak havoc on your credit card bill if left ignored. That's why it's important to know the fees associated with a credit card before you apply rather than after.
With that, here are 6 credit card fees to consider and watch out for when applying for a new business rewards credit card.
- Annual Fees
Annual fees are arguably the most reviled of any credit card fees. Credit cards with annual fees get a bad reputation, since some of the cards that require them are genuinely solid and the fees often waived the first year. Most airline credit cards, for example, include annual fees but also go a long way toward saving members on airfare and travel.
That said, annual fees are also the most exorbitant, which is why it's so important to know ahead of time whether or not you should expect to see an annual fee on a future credit card bill.
- Late Payment Fees
Late payments can happen to the best of us. You should never plan on paying a late payment fee, but it's nice to know what you can expect to pay ahead of time in case it happens. It's kind of like taking the shock out of seeing a parking ticket. Kind of.
One consumer credit card – the Citi Simplicity® Card – does away with annual fees entirely. Another card – the Discover it™ Card – will waive the first late payment fee (it's $35 thereafter). As for the average business credit card? Well, you can expect to pay up to $35 if you miss a payment, and that doesn't even begin to account for the havoc that late payment could be wreaking on your credit report.
The moral? Don't. Pay. Late. Ever.
- Foreign Transaction Fees
If you're planning on taking your business credit card abroad, it's crucial to consider foreign transaction fees.
Imagine returning home from an amazing trip abroad only to find a credit card bill littered with 3 percent transaction fees (the going rate among average credit cards). Don't let this happen to you.
There are a handful of excellent credit cards available that don't charge foreign transaction fees, including the aforementioned Discover card and many popular travel cards. If you think traveling abroad will even be considered with your new card, than it's always better to be safe than sorry.
- Balance Transfer Fees
Are you planning on transferring an existing credit card balance to your new card? If so, there are two things to consider when applying for your next card: i.) Is there 0 percent interest applied to balance transfers in the intro period and ii.) How much does it cost to transfer my balance?
The former is actually much more important, since cutting out interest fees from your existing balance can expedite the process of paying down your debt considerably. The average going rate for transferring a balance to a zero interest credit card is 3 percent of the total being transferred, however there is one consumer card – Slate from Chase – that does not charge a fee for transferring a balance.
Consider the balance transfer fee the price you pay to eliminate interest. The reality is that you'll save a lot more in the long run at zero interest.
- Cash Advance Fees
Here's the thing about credit card cash advances … you should avoid them. At all costs, really.
First, there's the fee – often 5 percent or more of the cash advance you're requesting from your credit card issuer. Second, there's the interest rates associated with the cash advance, which are often considerably higher than the standard APR on your card.
Cash advances are basically the equivalent of a payday loan, courtesy of your credit card. Unless an absolute business emergency calls for it, it's best to avoid them completely.
- Minimum Interest Charge
Finally, there are minimum interest charges. If you've ever paid interest on a credit card, than you may have noticed a small charge – maybe $1.50 or $2 – in addition to the APR you're paying on your credit card bill. Basically, credit cards will charge you a fee for paying interest. As if paying interest wasn't bad enough, some cards will charge you simply for … well ... charging you.
Minimum interest charges are small, but they drive the point home further that you really never want to pay interest on your credit card bill. Sometimes it's inevitable, but if it isn't, it's best to keep the balance on your new card interest-fee to avoid some (or all) of the above fees.
