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Most people do not give much thought to how much
the use of credit cards really costs. While you
may think you are aware of the costs of credit,
there are many hidden fees and charges that often
go unnoticed by consumers until it is too late.
If you do not keep a very close watch on your
credit card
fees, you could end up paying hundreds of dollars
per years without even realizing it. If you are
trying to stay within a budget, hidden credit card
fees can be a real drain on your finances.
Here are some of the most common types of credit
card fees and what you can do to avoid them:
Your
grace period
may seem to be a period of time in which you can
pay your bill past the due date without accruing
additional interest of fees. While this may have
been true in the past, credit card companies are
making it more difficult to pay your bill late
without any extra charges. In previous years, if
you charged the maximum on your credit card but
were able to pay your balance in full before the
end of the grace period, it was like a loan
extension that cost you no additional money. The
majority of credit card companies have reduced the
grace period to less than 25 days and some have
eliminated
grace periods
all together. A purchase you make at noon today
will usually begin accruing interest immediately.
Check the fine print on your contract with the
credit card company. If you find that you have no
grace period before interest starts to build,
consider switching to a more user-friendly card.
Late fees can really add up. Make certain you
know what the late fees are for your credit card
and under what circumstances you can be charged.
Late fees have increased dramatically over the
past several years. This fact combined with a
reduction in your grace period means a hefty
profit for credit card companies. Whenever
possible, send your payment the very day you
receive your credit card statement. There are
several reasons to never make a late payment on
your
credit cards.
The most obvious reason is that you will avoid any
late fees. Next, a late payment can be reported
to the major
credit bureaus,
leaving a bad mark on your
credit report.
There is also the possibility that by making one
late payment, your
interest rate
can be raised permanently.
You may not be aware that even with a single late
payment, your credit card company can, and most
likely will, increase your interest rate. One
late payment gives your credit card company the
right to raise your
interest rate
to the maximum allowed by law. This does not just
apply to your credit cards. Any late payments
reported on your credit report can give all your
lenders the right to raise your
interest rates.
A late payment means higher risk to a lender and
you may find that several of your interest rates
go up due to a pate payment listed on your credit
report.
Keeping your interest rates low and avoiding
hidden charges and fees is the best way to save
money over the long-term when it comes to your
credit cards.
Managing your credit is one of the most important
factors in your overall financial stability.
Make sure you understand completely the terms and
conditions of your credit cards and all other
credit accounts you may have such as your car
loan, mortgage, and any other revolving accounts.
By making your payments on time, you will save
hundreds or more dollars each year in interest and
other fees.
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