by Joseph Kenny | 06/17/09

Using credit to purchase much needed or even essential items is the typical way of life these days; however, when the fees are added on to the amount you already need to pay back, it can be devastating.

The dangers of getting into large amounts of debt due to credit card fees are very real and can even beak up a once happy home. It is imperative to know what all types of card fees a credit card brings with it before you decide to make any purchases using that card.

First of all, there's the annual fee. This is the basic fee that you'll be charged as a "convenience fee" of sorts for using your credit card in the first place. As the name suggests, its billed annually, but in certain circumstances it may be split up into monthly or quarterly payments instead. Keep this in mind, and know what you're getting into. While usually the annual rate is a nominal fee at best with unsecured cards, some secured cards can have an annual fee that equals your credit limit, meaning that when you first activate the card, it'll be deducted from your limit, thus giving you another liability with no new purchasing or investment power. Though rare, this does happen, so be on the lookout!

Balance transfer fees come next. Many credit cards, especially those intended to be used as debt consolidation, often make a big deal out of their ability to transfer the balances of your other cards or debts onto the new card in question. This is all well in good, especially if you're consolidating, but be certain that you know what fees, if any, are involved in doing this. A one-time fee is acceptable and even expected, but a balance transfer fee that involves leverages interest of a higher rate on a transferred balance is likely to get you in trouble and may not amount to much in the way of consolidated savings.

Another type of fee to keep in mind is the cash advance fee. More and more, people are taking out credit cards as a form of loan, using their credit limit as a cash advance. Knowing this, many credit card companies are starting to apply higher interest rates to transfers of this type, up to three times higher than the interest rates on typical purchases and charges made with your card. While using your cards as a source of cash advance is a great way to make an investment in anything you like, you do need to be very careful. If the interest rate on your cash advance is higher than the interest rates on the debts you're trying to pay off with it, obviously it's not in your interest to make such a transaction.

Also, there is the dreaded over limit fee, which can plummet the cardholder into spiralling debt.

It is now hopefully apparent to you, knowing the types of credit card fees, credit card terms and how to avoid them is an essential step in being a responsible credit card user. Follow the rules; as a result, you will find yourself a financially healthy individual with no need for bankruptcy or financial worries.