Save on Your Credit Card Bill: Avoid These 7 Credit Card Fees

by Venus Zoleta, on category "Credit Card"

August 29, 2018

Credit Card Fees to Avoid |

“A credit card is expensive and often leads to unmanageable debt.” Agree or disagree? This is a common concern—and a big misconception—of the average Filipino about owning a plastic card. But credit cards don’t deserve such a bad rep. Just as money isn’t the root of all evil, a credit card in itself won’t drown you in debt. Rather, it’s how you choose and use it.

Whether you already own a card or still looking for one, you should be thinking of ways to avoid—or at least reduce—your credit card fees. This can really help you save money on your credit card bill.

5 Credit Card Fees to Avoid Through Financial Discipline

Credit Card Fees - Financial Life Survey |
A recent study echoes a glaring reality about credit card use in the Philippines: Only two in 10 Filipinos own a credit card. Lack of financial discipline was one of the top reasons that kept people from getting a credit card, the study found.

A credit card is nothing to be scared of. If you use your card responsibly, you can stretch your budget because you won’t have to pay these five credit card fees.

1. Finance Charge

The 2018 Financial Life Survey results show that interest rates were the number one reason Filipinos didn’t have a credit card. This is another misconception that needs to be disproved.

An interest payment—or the finance charge on credit card bills—applies only when you carry over a balance from the previous month. This means that you’ll keep paying anywhere from 2% to 3.54% of the overdue amount every month if you fail to pay your balance in full. As long as you’re paying the finance charge monthly, it’s easy to rack up debt on your card.

Always pay your credit card bill in full rather than paying just the minimum amount due. This will keep your finance charge at zero and lower your bill.
Apply for a Metrobank credit card with Moneymax

2. Late Payment Fee

Making timely credit card payments is just as important as paying your bills in full. Each time you miss the due date, the bank will charge you a penalty fee between PHP 300 and PHP 750 (or 2.25% to 8% of the total balance) on your next bill. On top of that, the late penalty fee is added to the finance charge computation, which further increases the amount you’ll have to pay next month.

Avoid a late payment fee by paying your credit card bill on time. If you can’t afford to pay the full balance for a certain month due to a financial emergency, pay the minimum balance at the very least.

3. Cash Advance Fee

Credit Card Fees - Cash Advance |
A credit card cash advance is one of the most expensive credit card fees. Every time you withdraw cash using your card, the bank charges 3% to 5% of the cash advance. Not only that, credit card cash advances have no grace period. This means you accumulate interest right away until you’ve fully paid the withdrawn amount.

As much as you can, avoid making cash advance transactions, especially for non-emergencies. If you need quick cash, consider alternatives such as low-interest personal loans.

4. Over Credit Limit Fee

Maxing out your credit card is a big no-no if you’re trying to cut down your bills. It’s easy to exceed your credit card limit that way. In addition to a higher balance, you’ll be paying a PHP 500 to PHP 1,500 fee for each month you go over your credit limit.

Each time you whip out your card to buy something, ask yourself: “Can I afford to pay this in cash?” If the answer is no, then the purchase isn’t worth pushing through. Also, be on top of your credit card spending. Regularly monitor your billing statements online to ensure you aren’t spending more than 30% of your credit limit.

5. Returned Check Fee

Credit Card Fees - Returned Check Fee |
Do you make credit card payments through a check? When your checking or current account has insufficient funds or your check has incorrect information, the bank will return your check and charge you a fee, ranging from PHP 100 to PHP 1,000.

Issuing a check to pay for your credit card bill can be a hassle. Try more convenient credit card payment channels such as your issuer’s ATM, online, and mobile banking facilities. You can also pay using your smartphone through mobile payment apps like GCash.

2 Credit Card Fees to Avoid by Choosing a Card Wisely

Whether you pay certain credit card fees or not also depends on your choice of card. Some credit cards, for example, don’t charge an annual fee or a foreign currency transaction fee. If your card charges them, you might want to switch to one that doesn’t.

1. Annual Fee

Credit Card Fees - No Annual Fee |
Annual fees for credit cards in the Philippines go as high as PHP 6,000. Whether you use your card frequently or rarely, the annual fee to pay doesn’t change.

Unknown to many, the annual fee can be avoided. Here are the different ways to avoid paying credit card fees like an annual fee:

  • Apply for or switch to a credit card with no annual fee. Banks like AUB, BPI, Citibank, EastWest Bank, and Metrobank offer some credit cards with free annual fee for life.
  • Or get a card with a waived annual fee for the first year. If none of the credit cards with zero annual fee matches your needs, the next best option is a card that doesn’t charge an annual fee for the first year. At least, you’ll save thousands of bucks in a year before you start paying the annual fee.
  • Redeem your credit card rewards points for an annual fee waiver. If you’ve accumulated enough rewards points, you can use them to waive your annual fee.
  • Contact the bank to request a waived annual fee. It may be worth asking the bank to waive your annual fee if your card is in good standing and you meet the bank’s minimum spending requirement within a certain period.

2. Foreign Transaction Fee

Credit Card Fees - Foreign Transaction Fee |
When you use your credit card when traveling abroad, you’ll pay a service fee of 0.85% to 2.50% of the foreign transaction amount. Credit card networks such as Mastercard and Visa impose an additional 1% assessment fee.

To avoid paying this fee, find a credit card with no foreign transaction fee. Security Bank credit cards, for example, don’t have a service fee for overseas transactions. Among the credit cards that do, BPI credit cards come with the lowest foreign transaction fee of 0.85%.

Final Thoughts

An effective way to make your credit card payment easier on the budget is to avoid certain credit card fees (or at least minimize them). Having financial discipline and choosing the right card can help you eliminate some credit card fees from your billing statements. If you’re able to achieve them, you’ll realize that owning a credit card isn’t so bad at all.
(Photos from
Credit Card CTA