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You use your credit card every day, yet you still do not know the power it holds. A credit card can be a beautiful thing if used correctly, but if used incorrectly it can cause headache, heartache and financial strain. Unfortunately, with a credit card if you fall into bad habits they can be costly to break.

For example, when you are late with a payment, lenders can charge you anywhere from $15 to $39, and that`s if you don`t go over your maximum spending limit. If you do go over your spending limit, you can be subject to increased interest rates. Some banks have reportedly increase interest rates for cardholders who have reached their spending limit to 24%.

When using a credit card, it can be easy to rack up hidden fees and added interest rates. Here are a few key red flags to look for if you are trying to avoid excess credit card fees.

  1. Resist Temptation When it Comes to 'Cash Advance' Offers. They are usually traps that require high fees, interest and repayment rates. Research shows that the 'cash advance' option on a credit card charges higher interest rates than traditional credit card purchases. The interest also starts accumulating from the date of the transaction.
  2. Don`t Gamble With Your Credit Card. In some places such as the USA and the UK, credit card issuers treat ATM withdrawals and gambling with a credit card as a cash advance. These transactions result in higher annual rates for consumers. Also, money transfers using a credit card, have the same affect. To illustrate, research shows that consumers paying for online gambling with their credit cards are charged an average APR of 27.9%. This is 13% higher than the average APR on a traditional unsecured credit card.
  3. Know if You Need to Have a Balance. Some cards require that you keep a minimum balance to avoid being charged for the account. You have to check with your bank to see if your account has a balance charge. Cards such as the Wells Fargo prime rate credit card charges a $2 fee if you don`t hold a balance on the card.

Credit cards offer consumers flexibility in their personal finance matters. But if not used properly can send them down the road to debt collection and credit card default. Protect yourself by knowing and understanding the account you have, and any hidden fees that may be associated with it.