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What hidden fees should I watch out for with Business Credit Cards that offer Rewards?
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What hidden fees should I watch out for with Business Credit Cards that offer Rewards?
Updated:17/05/2024
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When considering business credit cards with rewards, it’s essential to identify hidden fees that may impact your overall benefits.
1. Annual Fees
- Many business credit cards charge an annual fee, which can range from $0 to several hundred dollars.
- Evaluate the rewards and benefits against the fee to determine overall value.
2. Foreign Transaction Fees
- Some cards impose fees for purchases made in foreign currencies, typically around 1% to 3% of the transaction amount.
- This can add up significantly for international businesses or travel-related expenses.
3. Late Payment Fees
- If a payment is not made on time, late fees can be steep, often exceeding $40.
- Timely payments are crucial to avoid these fees and to maintain a good credit score.
4. Balance Transfer Fees
- When moving balances from other cards, a balance transfer fee may apply, usually 3% to 5% of the transferred amount.
- Evaluate whether the rewards earned justify this cost.
5. Cash Advance Fees
- Getting cash from your credit card typically incurs a fee, often around 3% to 5%, plus a higher interest rate.
- This can significantly erode the benefits of rewards earned.
6. Redemption Fees
- Some rewards programs may charge fees for redeeming points, particularly for travel bookings.
- Understand the redemption policies to make the most of your rewards.
7. Inactivity Fees
- If the card is unused for a certain period (usually 12 months), some issuers may charge an inactivity fee.
- Be aware of your usage to avoid unnecessary charges.
Comparison Table of Common Hidden Fees
Fee Type | Typical Range | Impact on Rewards |
---|---|---|
Annual Fee | $0 – $500+ | Can offset rewards value |
Foreign Transaction Fee | 1% – 3% | Reduces rewards on international purchases |
Late Payment Fee | $25 – $40+ | Negates potential rewards |
Balance Transfer Fee | 3% – 5% | Limits overall benefits |
Cash Advance Fee | 3% – 5% | Usually not worth the rewards |
Redemption Fee | $0 – $50+ | Yes, affects reward value |
Inactivity Fee | $0 – $50 | Encourages usage, otherwise costly |
Mind Map of Key Considerations
- Business Credit Cards
- Rewards Program
- Types of Rewards
- Redemption Process
- Fees to Consider
- Annual Fees
- Transaction Fees
- Redemption Fees
- Spending Patterns
- Business Travel
- Office Supplies
- Rewards Program
Statistical Insight
Fee Type | Percentage of cardholders affected |
---|---|
Annual Fee | 54% |
Foreign Transaction Fee | 30% |
Late Payment Fee | 20% |
Cash Advance Fee | 15% |
Inactivity Fee | 10% |
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