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How to avoid credit card charges

Credit card charges are not what you want to spend your money on.

Here’s a guide to the different types of fees, when they occur and how to avoid them.

What's the difference between interest and fees?

Firstly, it’s important to recognise the difference between interest and fees. If you don’t pay off what you owe in full each month – you’ll typically be charged interest on the outstanding amount, known as the balance.

Some credit cards also come with an annual fee, though many don’t. More often, you’ll incur fees for doing, or not doing, something in particular.

Explore more: How do credit cards work?

Types of credit card fees

Missed or late payments

A fee for making a monthly repayment late. It’s typically £12. You’ll also incur a fee if you pay less than the agreed minimum repayment or if your payment bounces.

Going over your credit limit

A fee for going beyond your credit card limit – in other words, owing more than a card provider has agreed to lend you at any given time. This fee is also likely to be around £12.

Balance transfers

There’s often a fee for transferring your outstanding balance from one credit card to another. This will be set out in any offer made to you.  

Cash withdrawals

There’s typically a fee for withdrawing cash – known as a cash advance. This will often be a percentage of the amount you withdraw, with a stated minimum fee. The minimum on HSBC credit cards is £3.

Using your credit card outside the UK

You may have to pay a non-sterling transaction fee for using your card outside the UK and when withdrawing cash.

How to avoid fees

The good news is, the above fees are avoidable. Here are some tips on how to manage your credit card so you don’t incur fees:

1. Pay off as much as you can

Ideally, pay off your balance in full each month. Failing that, pay as much as you can and at the very least your minimum repayment.

2. Automate your payments

Direct Debits help you avoid fees and give you one less job to do each month. Set up a recurring monthly payment for as much as you can afford to pay off and at least the minimum repayment.

If you do automate your payments, keep in mind you can still make other payments throughout the month so you can clear the debt faster.

3. Change payment dates

Pay at the time of month that suits you best. For example, if you get paid on a certain day each month, set up a Direct Debit for the money to come out on that day or the day after. Then you’ll know you can make the payment.

4. Know your limits

Check the terms of your credit card and keep your borrowing limit in mind. Make sure it’s set at a level you’re comfortable with and don’t go over it. Check your statements and use online banking, or an app to keep an eye on your balance.

5. Set up alerts

If you have an HSBC credit card, we’ll send you reminders and alerts when your payments are almost due or you’re approaching your limit. We all need a nudge sometimes – just try to take action if you get one.

6. Use a card with a 0% interest period

Some providers will offer an introductory 0% interest period on balance transfers and/or purchases. You may be able to find offers for fee-free balance transfers, although these aren’t common.

You’ll still need to make a minimum repayment each month and you’ll have to pay interest once the interest-free period ends.

7. Don't use your credit card to withdraw cash

Occasionally you may feel like you have no choice, but try to avoid using your credit card for cash withdrawals. They’re not designed to be used like debit cards and the fees can be large if you’re withdrawing a lot of cash.

8. Check the terms when travelling

Whether you’re planning on using travel money, a debit card or a credit card when spending outside the UK, be aware of the different factors involved, including fees and security.