How to Make a Credit Card Payment and Avoid Charges

As you think about the damage, it causes a sinking feeling to rise in the pit of your stomach, and deep anguish floods your heart like ferocious raindrops. Thoughts on how credit card has nearly wiped your funds out lead to fidgeting.

Suddenly as if realizing he has something worth saying, gesticulating with outstretched arms to the sky and then placing them squarely on the head and looking upwards, burst out in a strained voice with a contorted face, “Nobody told me this”.

Nobody told you that when you got a credit card, the situation could be this heart-rending and shattering. Instead of saving money in your 401k retirement savings account, all you do these days is paying banks month after month.

But how can you get out of this fix, you wonder?

Don’t worry; I will teach you how to make a credit card payment and avoid charges. Also, those who desire to obtain one should read on to explore techniques that cut waste while using the credit card.

Let us jump right into the heart of the post.

Think before you get a Credit card

Beware of financial transactions, the service provider charge fees, and guess who pays that fee, you. A payment card though handy, deserves a careful study to discover how to avoid fees.

Also, understanding the terms of a card saves money that some people pay out of ignorance. We will begin this exploration by tracing its origin and credit card Networks.

The origin of the credit card and who owns it.

Diners Club introduced it about seventy years ago in the US, and eight years later, the American Express bank created flexible credit cards for settling travel and entertainment bills.

Today, it is an extensively used payment method, and the Network owners include Discover, Visa, AMEX, and Master Card.

Business Insider says that in 2019, Visa had a total payment volume of more than 2 trillion dollars in America. That volume is excluding financial organizations and merchants globally using the brand, which places it at the top of the credit card network.

That said, I am sure you must have heard about the Credit score; if not, let us treat that now.

Credit score agencies.

Trans Union, Equifax, and Experian were set up to compute your credit score, having three figures that are used by banks for assessing credit card applications.

Equifax and Trans Union scores begin with 300 and stop at 850, Experian score starts with 330 and ends at 850, while the Fair Isaac Corporation (FICO) develops its score from those agencies.

The FICO score is 300 to 850, and Banks rely on a FICO score of 670 to appraise customers applying for credit cards. Here a table and the analysis.

FICO rating’s explanations

It is right to know the components of the FICO rating. Precisely 65% of the rating is created from a person’s payment history and credit utilization ratio. See the chart below.

How to obtain a credit card.

To acquire a specific bank’s card, log on to its website, complete an application form with facts about you, and add income plus social security number. The bank will appraise, approve, or reject it. If it refuses your application, go to banks that provide the Pre-approved card to request for one, or ask for the secured credit card.

Payment terms.

Another thing to learn on this post on how to make a credit card payment and avoid charges is the terms. Terms and conditions are there to show you the benefits and responsibilities of signing up to obtain a card, so read it thoroughly.

These payment conditions differ for different Issuing banks. It typically lists the rules and privileges of a borrower. It covers areas like defaults, charges, grace period, interest fee, full or minimum sum repayment, and so forth.

Moreover, the bank assesses how risky their card-carrying customers is by calculating their credit utilization ratio. Don’t use up to 30% of the authorized credit line so that the banks will recognize you as a careful spender and user of its loans.

Payment methods.

Some credit cards users adopt the repayment of only the minimum value of their bills before the last date of payment to be in good standing with the Lender, but that is inadvisable. Adopting that technique means a statement balance that accrues interest and fees, making the service costlier.

The second method enables users to avoid interest charges by settling the precise sum they spend through a card monthly. We recommend this method for active control of purchases with the card. Mind your expenditure and settle the statement balance.

Fees and penalties, and how to avoid them?

Next on this article on how to make a credit card payment and avoid charges, is examining the strategies to lower costs.

Paying later and not paying at all means extra charges so, learn how credit card payment works. Also, see a list below that explains some costs and ways to avoid them.

Late Payment Fee.

To evade a fee of about $30 charged due to late payment of your indebtedness, pay early. Besides, after 30 days of nonpayment, the lender informs the credit bureau of the situation, and that will affect your credit record negatively.

Another way of settling your bill is by instructing your banker to implement the automatic settlement of your accounts at a specific date monthly.

Expedited Fee

Getting the help of the Lender’s Customer Support official to make an accelerated payment attracts a cost. To avert it, stop using that system.

Foreign Transaction Fee

Deals in a foreign currency attract a fee of about 1% to 4% of the worth of that deal. To avert that charge, obtain cards without it.

Over the Limit Fee

Whenever you are above the set limit on your card, it costs you around $20 to $40, subject to how many times you exceed it. To avert it, don’t go above the limit.

Finance Charge

This bill is charged every month for having an unpaid statement debt. To escape it, settle the expenditure.

Annual Fee

It is deducted annually for using that card. To prevent it, obtain the one without this feature.

Cash Advance Fee

Withdrawal through an ATM with a credit card attracts a charge calculated on the sum drawn. The cost could be between $15 and $30. Evade it by obtaining a prepaid card.

Return payment fee

Provide adequate funds consistently in a reserved account for settling bills to prevent the return of a check or instrument. That is how to avoid it.

Balance Transfer Fee

When you transfer a card balance into another one, the Lender charges this bill. Assess whether the transfer is worth doing.

Application Fee

Some banks take a processing charge. Evaluate the pros and cons depending on your discovery, and pick any card without a fee.

Replacement charge

It is for replacing a lost card. Safeguard it to avert this bill.

Increasing card limit

Adjusting this sum of credit upwards is at a cost. To prevent that cost, carry on with the existing ceiling.

If you can’t pay your credit card debt, what can you do?

Inform the Financier of the difficulties of settling the monthly minimum repayment. Nonpayment of the expenditure worsens your credit record. Suggest a loan workout to the Lender instead of abandoning your responsibility.

How to solve the credit card payment problem.

• Assess what you earn and confirm the sum you can pay without defaulting.
• Send a new proposal with the exact time to start paying again and reasons for sending that proposal.
• Next, approach a credit counseling agency and confirm if it could resolve your cash flow issues and determine its fee for the service.

Conclusion

This post discussed how to make a credit card payment and avoid charges. You learned the history of the credit card, credit score, and its Agencies, and making payments without unnecessary costs. Besides, you now know how to use a credit card efficiently to reduce cost, and what to tell the bank if you cannot repay the minimum sum.

Do you have strategies to share on this topic? Comment on the post to help improve the use of this payment car