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By
federal laws,
credit card
fees cannot actually be "hidden" from consumers,
but that doesn't mean that all credit card users
fully understand how they are charged or what
instances will result in fees or increases to
existing rates. Sometimes, the fees are provided
in the small print of the back of your statements,
or only in the account disclosure statement you
receive when you first open the account- so it's
easy to over look the fine details of credit card
fees- and that is how they got the name "hidden".
The only sure way for someone to skip the
sometimes ridiculously high fees associated with
credit cards
is to pay their bill before it's due, each and
every month. In 1998, cardholders paid about $4.8
billion in penalty fees- which seems like a lot
until you consider the fees of 2005- a whopping
$12 billion. This leads to the conclusion that
people are not paying their credit card bills on
time and are not avoiding the penalties associated
with late payments!
You'll want to take a close look at your card
member agreement. Some credit card companies are
now recording receipt of payments received in
envelopes other than the pre-printed envelopes up
to 5 days after they receive them! In addition,
where as just a few years ago you could be counted
as "on time" if your payment was postmarked by the
due date, now the majority of companies require
that the payment must arrive before noon on the
day it is due to be counted as on time. As if that
wasn't stringent enough, there are even many card
issuers who have decided to shorten the billing
periods from 31 days to 20 days!
Late penalties on credit cards are anywhere from
$15 to $39. If the late fee puts you over your
maximum limits, you'll also get slammed with an
over limit fee. Going over your maximum amount can
also cause the card issuer to increase your
interest rate
as much as 24%.
Here's a penalty you probably didn't know about:
if you are late on any of your creditors, a credit
card lender could raise your interest rate. So
even if you pay your credit card bill on time
religiously, if you are late once with one of your
other lenders, your credit card lender has the
right to raise your interest rate! The institute
for Consumer Financial Education in San Diego
reports that about 40% of car issuers raise rates
if they find their cardholders are late on other
accounts.
How about companies that charge you a fee for
having a card without a balance on it? Wells
Fargo's
prime rate
card will charge you $2 a month in minimum
finance charges
if you do not have a balance on the card!
Wonder what they do with all the fees they
collect? Banks will explain the fees are there in
order to cover their costs. It's difficult to
think they need these "hidden" fees when the
regular and more well known charges like interest
charges are bringing in over $80 billion each
year, and an additional $31 billion a year is
collected in cash-advance fees,
balance transfer
fees,
annual fees
and merchant fees!
Can you prevent yourself from having to pay these
"hidden" fees if you use credit cards? Some of
them. Try writing your check for at least your
minimum amount due (more whenever possible) the
very same day you receive the credit card bill.
Put it in the mail the next day and you'll never
have a late payment. Even better than doing that
would be to pay your bills online automatically
each month, so there's no way to forget to mail
it.
You can also save considerably by choosing the
right card for your spending needs and payment
habits. Check for the best card on
The-CreditCard-Review.com,
where there are hundreds of cards to choose from
and information available on each to help you make
the best selection. Make sure to keep an eye on
changing terms of your card- if the interest rate
increases or they begin charging an
annual fee-
transfer the balance to a better card.
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