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How to avoid credit card charges

Credit cards can be a powerful financial tool when used wisely, offering convenience, rewards, and even interest-free borrowing during promotional periods. But mismanaging them can lead to costly charges and mounting debt. This guide explains practical steps you can take to use your credit card effectively and avoid unnecessary fees or interest.

Credit cards can be a powerful financial tool when used wisely, offering convenience, rewards, and even interest-free borrowing during promotional periods. But mismanaging them can lead to costly charges and mounting debt. This guide explains practical steps you can take to use your credit card effectively and avoid unnecessary fees or interest.

Written by
The Editorial Team
Experts in personal finance, insurance and utilities
Posted
21 JANUARY 2025
6 min read
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Looking for a bitesized overview of how to avoid credit card charges? Here are the main need-to-knows:

  • Don’t borrow beyond your means; only spend what you can afford to repay.
  • Diarise promotional period end dates to help you keep track of when your 0% interest finishes and avoid having to pay higher interest rates.
  • Never miss a monthly payment as this could result in you losing your promotional rate. 
  • Be wary of only making minimum payments as it will take longer to clear your debt. If you can, clear your balance in full each month and stay within your agreed credit limit to avoid interest charges and penalties.
  • Be careful about spending on a balance transfer card as you risk high interest charges.

 

Don’t borrow more than you can afford 

While a generous credit limit can be enticing, it’s not an invitation to spend more than you can afford to repay. Instead:

  • Treat it as part of your budget rather than extra income.
  • Before buying something, think about whether you can fully repay it when your bill is due or, if you have an interest-free credit card, before the 0% period ends. 

Borrowing beyond your means risks you falling into debt and running up hefty interest charges.

Diarise the end of promotional periods

Many credit cards offer promotional deals, such as 0% interest on purchases. These deals typically last a set period, after which a much higher interest rate will kick in. Put the end date of these periods in your calendar and do your best to pay off the balance before higher interest kicks in.

If this isn’t going to be possible, it might be worth looking into a 0% balance transfer card. These cards let you transfer your debt over for a fee and then pay 0% interest for a set period.

Check out our handy guide for in-depth tips on how to clear your credit card debt.

Never miss a payment (setting up a direct debit will help)

You’ll need to make monthly payments on your credit card. While this won’t always be on exactly the same day, it’ll be roughly around the same time each month.

Missing a payment can result in:

  • Late payment fees, usually around £12
  • Harm to your credit score
  • Losing your low or 0% interest period and being switched to the lender’s higher standard rate.

It’s wise to set up a direct debit for at least the minimum monthly repayment so you don’t end up forgetting to pay it. Your lender will tell you what your minimum monthly payment is each month, but remember:

  • Only paying back the minimum amount can significantly increase the time it takes to clear your debt. This means you could also pay more interest in total if you don’t have a 0%-interest card.
  • The best way to avoid credit card interest is to pay your balance in full every month. Doing this means, depending on the type of credit card you have, you could reap the benefits of using one – such as convenience or rewards – without facing extra costs.

Bear in mind...

In some instances you may still be charged interest even if you pay off the balance in full – for example, if you withdraw cash on a credit card.

 

Beware spending on your card if you’ve done a balance transfer

Balance transfer cards are useful for consolidating debt and cutting costs, often offering 0% interest for a set period. But new spending on these cards may attract high interest rates, as promotional rates often don’t apply to new things you buy. Avoid making new purchases with a balance transfer card so you don’t have to pay interest on your balance.

Don't use your card to take out cash

Withdrawing cash on a credit card can be one of the most expensive ways to take out money. With a credit card cash advance, you:

  • Pay daily interest on the cash amount from the day you take it out until it’s fully paid off
  • May have to pay a cash advance fee, which can be a fixed fee or a percentage of the amount withdrawn
  • Will have a record on your credit file that could have negative effects on future borrowing.

You can use a money transfer credit card to transfer money from your credit card to your bank account. Unfortunately, it’s not generally possible to do this without any charges whatsoever – you normally have to pay a fee for each transfer. But some lenders may offer a low or no-interest deal on your balance for a set time.

Check for non-sterling fees if using your card abroad

You’ll usually have to pay fees if you use a standard credit or debit card abroad. These include:

  • A foreign transaction fee – usually a percentage of the transaction amount
  • For credit cards, a cash advance fee – in the same way you’d be charged for taking out cash at home.

To help avoid these fees, think about using a travel credit card. They can be great for people who like to spend responsibly with a card while abroad. These cards:

  • Don't charge you foreign transaction fees
  • Offer competitive exchange rates
  • Give you buying protection
  • May allow you to earn rewards like cashback.

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Allie Simpson - Personal finance and insurance specialist

With almost 10 years’ experience writing, leading and managing content, Allie is an expert in personal finance and insurance products. She’s spent her career helping others quickly understand complicated topics, to help them save money and focus on what matters.

Learn more about Allie

This article is written by a Compare the Market expert, backed by data and enhanced by AI. Find out how we ensure accuracy and quality in our Editorial Guidelines.

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