How to Avoid Credit Card Fees in Canada

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credit card feesMaybe you think credit card fees are as inevitable as that old idiom about death and taxes. Used wisely, your credit card is a financial tool. Plus, there are some pretty sweet perks to having a piece of plastic in your back pocket – managing cash flow, travel rewards, comprehensive insurance, and consumer protection. After all, how else are you going to afford that suite overlooking the Vegas strip?

But credit cards can also come with some hefty charges. It pays to know what fees are associated with credit cards, and even ask yourself: is it worth it to pay an annual fee for a credit card? (Depending on what you want from your credit card, the answer may be yes) Even if you’re the type of person who pays off their balance each month, there are other credit card charges you may not be aware of, as well as some tricks to avoid paying the fees. Here is how to avoid credit card fees – and our recommendations for the best credit cards to help you.

Annual Fees

Many banking institutions charge for the honour of carrying their card in your wallet. Annual credit card fees can vary widely, depending on the product. While fee-carrying credit cards often come with perks such as travel rewards, roadside assistance, or a concierge service, if these things don’t matter to you, why pay an annual fee at all?

The Tangerine Money-Back MasterCard is one of the best no annual fee credit cards on the market. Applicants only require a minimum personal income of $12,000 and are recommended to have at least a fair to good credit score. Another perk is you’ll also be able to earn 2% cashback rewards on your everyday purchases in up to two categories of your choice. You’ll still receive 0.5% money-back on everything else you purchase. Tangerine pays out rewards monthly – either applied to the balance of your credit card or directly into a Tangerine Savings Account. Not only can you save money, but you’re also not paying an annual fee for the privilege. You can learn more in our  Tangerine Money-Back Mastercard Review.

Another bonus? Apply for the Tangerine Money-Back Credit Card by January 31, 2020, and earn 4% Money-Back Rewards in up to 3 chosen categories* for your first 3 months, instead of the usual 2%.

Read more about the Tangerine Money-Back MasterCard.

Interest Charges

In an ideal world, the easiest way to avoid credit card fees is to pay off your statement in full and avoid interest charges. But sometimes life gets in the way, and you find yourself carrying a balance. Credit cards typically come with a 19.99% interest rate. So, it makes sense to avoid additional credit card charges and switch to a low-interest credit card.

For applicants with a strong credit score, the TD Emerald Flex Rate Visa* Card is a great option. With rates ranging from TD Prime + 4.50% to TD Prime + 12.75%, this card scales to your creditworthiness on purchases and cash advances. TD Prime is currently at 3.95%. Doing the math, even if your credit score isn’t stellar, you’ll still only be paying 16.70% interest, compared to almost 20% with other cards on the market. The annual fee is a reasonable $25 and TD Emerald Flex Rate Visa* Card can be used with Apple Pay.

TD Emerald Flex Rate Visa* Card Details:

TD Emerald Flex RateAnnual Fee: $25
Purchase APR: TD Prime + 4.50% up to TD Prime + 12.75%
Cash Advance APR: TD Prime + 4.50% up to TD Prime + 12.75%

Limited Time Offer – Online Only. Get a full Annual Fee rebate for the Primary Cardholder for the first year. Conditions apply. Must apply online by March 2, 2020.

Learn more about the TD Emerald Flex Rate Visa*.

*This offer is not available for residents of Quebec. For Quebec residents, please click here.

MORE: The Best Low Interest Rate Credit Cards in 2019.

Foreign Transaction Fees

Let’s face it – travelling can be expensive. On top of the paying for air travel and accommodation, there’s a hidden expense that you may not be aware of: foreign transaction fees. Foreign transaction fees are charged by your credit card company when you make purchases outside Canada or with a non-Canadian retailer. The fees—around 2 to 3 percent—are usually incorporated into the exchange rate, so they’re not always noticeable. But they can add up, especially if you’ve got the itch to wander, are planning to study abroad, or are an entrepreneur who makes online purchases in foreign currencies.

One savvy strategy to avoid paying these charges is to get one of the best no foreign transaction fee credit cards. We’re big fans of the Scotiabank Passport Visa Infinite* Card, as cardholders are not be charged a Foreign Currency Conversion mark-up on foreign currency purchases, whether you make them online or outside of Canada. Only the exchange rate applies. Plus, when you sign up, you can also earn up to 35,000 bonus Scotia Rewards points in your first year, which can be used towards travel. Win-win!

Read more about the Scotiabank Passport Visa Infinite* Card.

MORE: The Best No Foreign Fee Credit Cards for 2019.

Cash Advance Fees

The best way to avoid paying cash advance fees altogether is to have savings set aside that can be accessed in an emergency. But for those times when it is an emergency, it’s wise to understand how cash advance fees work before you hit up the ATM. As a rule, cash advances are charged at a higher interest rate than usual purchases – around 22% and upwards. And unlike a regular purchase, cash advances don’t have a grace period, meaning you’ll be charged interest from the day you withdraw the money. You may also be charged ATM fees on top of other credit card fees.

However, it is possible to find a credit card that won’t ding you so hard with high-interest rates on cash advances. For instance, the BMO® Preferred Rate Mastercard®* offers a low rate of 12.99% on cash advances – almost 10% less than most products on the market. All other purchases are also charged at 12.99% and BMO covers theft and damage protection for items bought with the card. Add to that, the Preferred Rate Mastercard comes with a low annual fee of $20. A fair to good credit score and minimum personal income of $15,000 is required to apply.

Read more about the BMO® Preferred Rate Mastercard®*.

Balance Transfer Fees

One strategy for tackling chronic credit card debt and avoiding sky-high credit card charges is through a balance transfer. Essentially, it involves paying off one credit card with another, by transferring your current debt from a higher-interest card to a credit card with a significantly lower interest rate.

Typically, a balance transfer credit card offers an extremely low or even 0% interest rate, which means you’ll save some serious dollars on interest charges. For instance, the MBNA True Line® Mastercard® makes it easier to minimize credit card fees with a special limited-time 0% balance transfer rate for the first 12 months, on transfers completed within 90 days of opening an account. Apply now, because this offer ends on February 29, 2020! MBNA True Line® Mastercard® applies a 3% fee to transfer your debit, but there’s also no annual fee. Even after the first 12 months, their Annual Interest Rate on Purchases (“AIR”) is very competitive at 12.99%.

Other card details: Interest on Cash Advances: 24.99% | Interest on Balance Transfers & Access Cheques: 12.99%

Read more about the MBNA True Line® Mastercard®.

*This offer is not available for residents of Quebec. For Quebec residents, please click here.

MORE: The Best Balance Transfer Credit Cards in Canada for 2019.

Late Payment Fees

Even if you’ve got the best intention to settle your balance in full every month, it pays to understand how late payments lead to added credit card fees. Canadian credit cards offer a minimum interest-free grace period of at least 21 days after the billing period. However, if you fail to pay in full by the due date, you’ll be charged interest.

All Canadian credit cards charge interest on unpaid balances, but you may be able to escape a penalty for a tardy payment. For instance, some Canadian banks may not impose a late payment “fee” on their credit cards, but you’ll still rack up interest on the outstanding balance. However, making late or missing payments could cost you in other ways: some institutions may automatically hike the interest rate if you make two late payments in a 12-month period. Make a habit of it and late payments could damage your credit score.

The bottom line? Missed or late payments on your credit card are never a good idea. Avoid this sticky situation by setting up pre-authorized payments from your chequing or savings account on (or ideally, before) your payment due date.

* This post was not sponsored. The views and opinions expressed in this review are purely my own.

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Amanda Lee

Amanda Lee

Amanda Lee has been a freelance lifestyle writer for 10 years. She is the former Managing Editor of Toronto.com, which is owned by the Toronto Star. Her bylines have appeared in major Canadian publications, including the Toronto Star, WestJet Magazine and Today's Parent. As a freelance copywriter and editor, Amanda has written branded content for a number of clients, balancing editorial voice with the brand's messaging. She is currently working with RBC Ventures, creating digital content that aligns with the Royal Bank of Canada's 15 different ventures. Amanda is enrolled in an MFA in Creative Nonfiction at King's College and working on her first book.
Amanda Lee

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