How much does a credit card cost?

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Credit card cost varies based on the credit card and how you use your credit card. You may be able to use a credit card for absolute free. Or, on the opposite end of the spectrum, your credit card could be expensive. It all depends on you and the credit card. Understanding the cost of a credit card is important for deciding whether you want to use a credit card at all.

You Can Use a Credit Card for Free

A credit card doesn't have to cost anything, but to use a credit card for free requires discipline.

The first step to avoiding credit card costs is choosing credit card that doesn't have any annual or monthly fees. These fees are typically unavoidable and automatically increase the cost of having a credit card. When you're choosing a credit card, read through the pricing details to learn which transactions will incur a fee. You'll need to know this once you start using the credit card.

Next, after you've received your credit card, you have to use it credit card in a way that eliminates fees. Start by paying your balance in full each month so you don't incur any interest. You have to follow this rule religiously. Any month you don't pay your balance in full, you're subject to a finance charge. The only exception to this rule is if you have a 0% promotional rate on purchases and you use the credit card for purchases. Note that while some credit card offer a 0% promotional rate on balance transfers, any balance transfer fee will increase the cost of the credit card.

Always pay your balance on time to avoid a late fee and if, your card charges a balance transfer or cash advance fee, don't use your credit card for those transactions. If your card charges a foreign transaction fee, avoid using that card when you're traveling out of the country.

The Potential Cost of a Credit Card

Not everyone will be able to use their credit card for free.

If you choose a credit card that has an annual fee, the fee will be automatically charged to your card the month. Fortunately, many credit card issuers waive the fee in the first year, giving you at least 12 months to enjoy your credit card at no cost.

Annual fees range from $30 to $500, depending on the credit card you choose. Annual fees range from $35 to $300 depending on the credit card. Higher annual fees are charged on credit cards for people with bad credit and premium credit cards for people with excellent credit.

You'd think most people would avoid credit cards that charge an annual fee, but sometimes it's worth it. For example, a credit card may offer perks that exceed the annual fee. Or, you have have trouble getting approved for other credit cards and a credit card with an annual fee is the only option.

The other credit card costs are based on the type of transactions you make with the credit card.