You can avoid many credit card costs by using your credit card responsibly. Here are 9 slip-ups that can increase the amount you pay for the convenience of using a credit card.

1. Paying credit card bills late.

When you use your credit card, you agree to pay your minimum payment by the due date. If you’re late on your credit card payment, there are some costly consequences. You’ll get charged a late fee that could be as much as $39 in some cases. Then, your interest rate could increase, which would also increase your minimum payment. If you’re in the habit of paying the minimum on your credit card, the late payment fee could make it hard to get caught up on payments.

2. Going over your credit limit.

Your credit limit is the maximum amount you can charge on your credit card without being charged a penalty. If you go over your credit limit, you’ll be charged an over-the-limit fee. Just like with late payments, your interest rate could increase if you exceed your credit limit. The over-the-limit fee will make your minimum payment go up. If you don’t pay the late fee plus your regular minimum payment, you’ll be charged a late fee.

3. Misunderstanding balance transfer deals.

A six-month zero percent interest balance transfer offer is a good deal, if you can pay off the balance within six months. However, once the offer expires, you’ll be subject to a much higher interest rate. The interest rate could be so high that you negate all the interest you saved during the no-interest period. Before you do a balance transfer, make sure you understand the terms of the promotion. Check your budget to see whether you can afford to pay off the balance within the promotional period. If you can’t, it could be cheaper to leave your balance where it is.

4. Taking out a cash advance.

Cash advances are much more expensive than purchases of the same amount. That’s because cash advances have a fee and a higher interest rate. Not only that, interest begins accruing on a cash advance the day you make the withdrawal. So, you don’t get a grace period to pay off the balance and avoid a finance charge. Since cash advances have higher interest rates, you’ll face higher finance charges on the balance.

5. Failing to report unauthorized credit card charges immediately.

When your credit card is lost or stolen, it’s important to report the missing credit card as soon as you notice the theft. If you notice fraudulent activity on your account, let your credit card issuer know as soon as possible. If you wait more than 60 days to report credit card fraud, you could be liable for some of the charges.

6. Paying only the minimum.

Making minimum only payments is always more expensive than paying off your credit card balance quickly. The longer it takes you to pay off your credit card balance, the more you’ll pay in finance charges. If all you pay is the minimum, you could end up paying double the amount of finance charges than the amount you originally charged.

7. Making purchases just to get more rewards.

Reward credit cards can be very beneficial, when you can afford to pay off the balance at the end of every month. Abusing reward credit cards just to accumulate rewards is risky because you pay not be able to repay the balance. Plus, reward credit cards tend to have higher interest rates, so if you don’t pay off your balance quickly, you could end up paying more in interest than you received in reward benefits.

8. Failing to read your credit card mail.

Credit card issuers are required to send advance notification of certain credit card changes, like an increase in your interest rate. If you have a tendency to throw away unmarked mail or even your billing statement inserts, you could miss an important announcement about your credit card. These disclosures keep you from going over your credit limit, making purchases on a high interest rate credit card, or from trying to use a credit card that’s been closed.

9. Adding authorized users to your account.

When you add an authorized user to your credit card, that person is allowed to make charges on the credit card, but isn’t required to make payments. Instead, you, as the primary account holder, are responsible for paying all charges made on the credit card. So, if your authorized user maxes out the credit card and incurs an over-the-limit charge, it’s your responsibility. You have to decide whether that’s a risk you’re willing to accept.

Credit card companies want you to pay more credit card fees because it makes them richer. If you want to avoid paying steep fees for your credit card, pay attention to the terms and conditions of your credit card and avoid these costly credit card slip-ups.

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You’ll pay a cash advance fee.

Cash advances aren’t free. A cash advance fee will be added to the balance of your cash advance. Credit card cash advance fees are calculated in one of two ways (or a combination of the two ways). You might be charge a cash advance fee that’s a percentage of the cash advance. The percentage is typically between 2% and 4%. That’s $2 to $4 for every $100 in cash you take out.

Some credit card issuers charge a flat fee regardless of the amount of the cash advance. For example, you might be charged a $10 cash advance fee regardless of whether you withdraw $100 or $1,000.

Finally, some credit card issuers use a combination of both these methods. For example, the card issuer might charge a fee that’s 3% of the cash advance or $5, whichever is greater. The minimum cash advance fee guarantees the card issuer receives a certain amount of money for your cash advance just in case, the percentage method is low.

You’ll pay an ATM fee.

If you use another bank’s ATM, you will probably be charged an ATM fee between $2 and $5. This is the same fee you’d pay if you used your check card with withdraw cash from another bank’s ATM. If your credit card issuer is a bank with ATM’s you may avoid the ATM fee by using your bank’s ATM. Otherwise, the fee will be added to your cash advance balance.

You’ll pay a higher interest rate.

One of the things that makes cash advances a bad idea is the higher interest rate. Cash advances nearly always have a higher interest rate than the interest rate that’s applied to your purchases. This means you pay more money for taking out a cash advance than you would making a purchase.

The cash advance interest rate is usually a few points higher than your purchase interest rate. Look at your credit card billing statement to learn your cash advance interest rate.

Interest starts accruing immediately.

Unlike purchases, cash advances don’t have a grace period, so interest starts being added to your balance starting on the day you take out the cash advance. By the time your billing statement comes in the mail, you’ll already have a finance charge on your cash advance, even if you started the billing cycle with a $0 balance.

Credit card cash advances are paid last.

If your credit card has multiple balances with different interest rates and a cash advance is one of them, your cash advance will probably be paid last.

Anytime you make a payment above the minimum, your credit card issuers can apply the payment to whichever balance it chooses. Card issuers usually apply any payment above the minimum to balances with the lowest interest rate, which is usually your purchase balance. Your cash advance balance, which will have a higher interest rate, may not have a payment applied to it. As a result, your cash advance balance may increase after finance charges are added. The longer it takes to pay off your lower interest rate balance, the higher your cash advance balance will become.

This method of applying payments to the balance with the lowest interest rate can only be used for a short period of time. After February 22, 2010, a new credit card law will require credit card issuers to apply any above-minimum payment to balances with higher interest rates.

How to Avoid a Cash Advance

These are some ways to avoid a credit card cash advance:

• Ask your employer for an advance on your paycheck. If there is a fee for an advance on your paycheck, it will pale in comparison to cash advance fees.
• If you can’t get an advance on your paycheck, consider working overtime to increase the amount of your next paycheck. Make sure you get approval ahead of time.
• Sign up for your bank’s overdraft protection. With overdraft protection, your bank uses a line of credit to cover transactions for which you don’t have enough money in your checking account.
• Borrow money from a family member or friend. They may not charge a fee at all for loaning money to you.
• Get a small loan from your bank. A loan will have a lower interest rate than a cash advance and will cost less if you pay it off quickly.
• Build an emergency fund and use it instead of borrowing money when you run into a financial emergency. An emergency fund must be planned and built well ahead of time.
• If you need money immediately, sell some items on eBay or Craigslist to earn cash.

If You Must Use a Cash Advance…

Realize that cash advances are expensive. Use a credit card that doesn’t have a balance so you can pay your cash advance back quicker. You can reduce the cost of a cash advance by paying it back by the time the billing statement comes rather than over a period of time.

Related posts:

1. How Finance Charges Are Calculated and How You Can Avoid Them
2. 7 Reasons to Pay Off Credit Card Debt
3. 5 Reasons to Check Your Credit Report