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As the holidays approach, inflation is ticking back up again and putting extra pressure on people’s budgets. When you add in the other economic pressures that are looming — and the traditional uptick in holiday spending that occurs during this time of the year — it makes sense to try and find ways to free up more cash in your budget. After all, when money is tight, every dollar counts, especially in terms of managing your finances.
While reducing your spending and increasing your income are two common approaches to this task, getting rid of the unnecessary credit card fees you’re paying can also free up some room in your budget. While credit cards can offer valuable rewards and other perks, the extra costs they come with can chip away at your budget. But the good news is that many of these card fees could otherwise be significantly reduced or avoided altogether. All it takes is a little strategic planning.
By taking action to get rid of these fees now, before 2025 rolls around, you can free up funds for other priorities, like savings or investments. But which credit card fees should you try and get rid of before the new year? That’s what we’ll detail below.
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5 unnecessary credit card fees to stop paying before 2025
If you want to get your finances in order for the new year, the following credit card fees could be having more of an impact on your budget than you’d expect:
Interest charges
Interest charges are one of the most expensive fees associated with credit card use, especially if you carry a balance from month to month. High annual percentage rates (APRs) can quickly escalate the cost of your purchases — and the average credit card APR has never been higher than it currently is at over 23%.
How to stop paying them:
- Pay your balance in full: You can avoid interest charges entirely by paying off your balance in full each month.
- Consolidate your debt: If you have multiple credit cards with high balances, consider consolidating your debt through a loan or a debt consolidation program, as these options often come with lower interest rates.
- Use a 0% APR credit card: Transfer your balance to a credit card offering an introductory 0% APR period. This gives you time to pay off your debt without accruing additional interest.
Find out what your credit card debt solutions are here.
Foreign transaction fees
Many credit cards charge a foreign transaction fee, which is typically about 3% of the purchase price when you use your card abroad or for international online shopping. That may seem like a small charge, but these types of costs can add up over time, especially if you’re making purchases through overseas vendors on the web.
How to stop paying them:
- Choose a no-foreign-transaction-fee card: To get rid of this charge, look for credit cards that don’t charge foreign transaction fees, especially if you travel frequently or shop internationally.
- Use alternative payment methods: Consider using a digital wallet or local currency when abroad to avoid additional charges.
Annual fees
Some credit cards charge annual fees, which generally range from $95 to over $500, depending on the card’s perks. While these fees can be worth the extra costs if you use the types of rewards or perks that you’re earning, they’re not always a good deal. Do the math, and if you find that the benefits you receive don’t outweigh the annual fee, you may want to stop shelling out the money for it.
How to stop paying them:
- Switch to a no-annual-fee card: Many credit cards offer competitive rewards and benefits without an annual fee.
- Negotiate with your issuer: Contact your credit card provider to request a waiver or reduction of the annual fee, especially if you’re a long-standing customer.
Cash advance fees
If you’re regularly borrowing cash from the line of credit on your credit card, you’re almost certainly paying a hefty fee to do so. Cash advances typically come with fees that range from 3% to 6% of the borrowed amount and will typically immediately start accruing interest charges, so the costs are even higher overall.
How to stop paying them:
- Avoid cash advances: Use a debit card or, if you need to borrow money, try using a personal loan instead of relying on credit card cash advances, as the rate will typically be much lower.
- Build an emergency fund: Having cash savings to rely on can help you avoid needing a cash advance in the first place.
Over-the-limit fees
While this practice has become less common in recent years, some credit card issuers will charge hefty fees if you exceed your credit limit. So, if you have a lower-limit credit card or are regularly close to maxing out your credit limit, it can be surprisingly simple to end up with these types of extra charges.
How to stop paying them:
- Opt out of over-the-limit coverage: Contact your issuer to decline over-the-limit coverage, which will prevent transactions from being approved that exceed your limit.
- Monitor your spending: Regularly check your credit card balance to ensure you’re staying within your limit.
The bottom line
By identifying and eliminating unnecessary credit card fees, you can maximize the value of your credit cards while saving money. With the right strategies in place, you can enjoy the benefits of credit cards without the financial drawbacks. And, by taking action now to eliminate these unnecessary charges, you can significantly improve your financial situation before 2025.
