The Latest Sneaky Credit Card Fees To Watch Out For
Many of us are familiar with that little plastic card that has come to our rescue in many a time of distress and has contributed to making our lives that much easier. However, this little plastic card also known as a credit card can also be a source of tremendous stress. And the cause of anguish is not just when you default. There is another less conspicuous yet almost as damaging a factor – hidden card fees.
You might be familiar with the recently passed Credit Card Act that aims to ease the financial burden of holding a credit card by reducing the fees you incur and making credit card transactions that much more transparent. Sounds like good news you might say. But before heave a huge sigh of relief, you might want to read through your credit card statement again.
In spite of this new law, many credit card companies have come up with new fees and penalties to make up for the fees being prohibited by the Act. The sad part about this is that all these fees are technically legal and as a customer you have to pay them.
Nevertheless, staying informed on the latest tricks card companies have up their sleeves and promptly reporting anything unusual you notice on your statement can help you avoid these sneaky charges or at least keep them to a minimum.
Changes in Address and Late Fees
A change in the credit company’s mailing address may cost you in terms of late fees. By the time your payment is rerouted from the old address and reaches the right address, it might be past the grace period for payment. The result is a charge to your account and quite possibly an increase in the interest rates you have to pay.
To evade this particular trick you can opt to verify the payment address by calling the company to inquire each time. A more practical approach would be to use the address on the envelope that came with your statement.
Remember that some credit card companies charge late fees up to the minute. So let’s say your payment due date is the 23rd of the month at 2.00 pm, if for some reason your payment comes in at 2.35 pm, they are within their rights to charge you up to $35 in late fees and increase your interest rates. One way to avoid this is to make sure you check the timing on your statement. An even better countermeasure is to send in your payment in as early as possible.
The Return of the Annual Fee
Previously known as inactivity fees, the annual fee is back. The penalties charged by credit card companies for not using the card often enough have been outlawed by the Credit Card Act. However, they really have not stopped charging inactivity- it has just been christened annual fees. So you’ll notice that the annual fee in your statement is likely to be waived is you make purchases during the over a certain amount.
Credit Card Limit increase Fee
When you apply for an increase in your credit card limit, the card company will as usual assess your credit and repayment history and then decide whether you do qualify. Now, if they do issue you with a higher limit card, they will charge you a fee that is up to 50% of the amount they have increased your limit by.
On the other hand, if you don’t qualify, some card companies will send you a card with a lower limit without telling you your limit request was denied. You might only get to know when you see a hefty over the limit charge on your statement for maxing out the card. So before you apply for a card limit increase obtain confirmation of how much it will cost you.
Statement Fees
The statement fee is the amount the credit card company will charge you for receiving your monthly statement in the mail. Luckily this is a fee you can anticipate and easily avoid. Just write to the card company or indicate in your application that you do not wish to receive a paper statement.
Set-up Fees
Set-up fees are usually charged to holders of secured credit cards. These are cards issued to people with poor credit history. The problem with this kind of fee is that it deducts a substantial amount from the credit card and then charges you an annual fee and by the time you’re actually using the credit card, the amount on it is significantly less than you deposited to the account. This makes it all the more easier for you to go over the limit without knowing it.
Interest Rates
Credit card companies can use a variety of ways to justify increasing the interest rate on your card. Your interest rate can go up based on late payments, over the limit penalties and even a decline in your credit score despite you making payments on your card way before time.
Overseas Transaction Fees
Credit card companies won’t tell you if they charge foreign exchange transaction fees. If you’re traveling and intend to use your credit card, make sure you get one that has a low foreign exchange transaction fee or that doesn’t charge currency exchange fees.
Many travelers have used their credit cards to pay for things abroad without knowing the exchange rate fee levied only to be shocked when they read their statement. What is even more surprising is that the fee is sometimes levied even though the transaction was done in dollars and the card is a dollar card.
My Bio:
About the Author: Mirsad Hasic is the editor of
target=”_new” href=”http://www.think-creditcards.com”>best credit card
deals, a consumer oriented site where you will also get valuable
tips and strategies on how to reach credit card debt relief.
