credit card problems

 

Credit Card Costs




Do you know what your credit card is truly costing you?  Many people assume that they do, but aren’t familiar with the hidden fees that many credit card companies are charging.  In fact, if you don’t keep close tabs on your credit card, you may end up paying hundreds of extra dollars per year—without ever really knowing it!  And if you’re trying to budget your money, those hidden fees can add up!

Let’s take a look at some of the most common credit card fees, and then talk about how you can avoid them...

Grace Periods

In the past, we could always count on grace periods before we ever had to start paying interest.  For example, if we charged our card to the limit, and could get it paid off before the grace period expired, then it would be like a free loan—we wouldn’t have to pay any interest.

Unfortunately, the credit card companies are making this harder and harder to do.  For starters, many of them have reduced the traditional 30 day grace period to 20-25 days.  If you hold a credit card, but didn’t realize this, then you’re likely paying interest without even knowing it!  What’s worse is that more and more credit card companies are eliminating grace periods altogether.  That means if you charged lunch today at noon, at 12:01 pm, you would be already paying interest on it.

How about your credit card?  You need to take a close look at the fine print and find out what kind of grace period you have.  If your credit card company has reduced it significantly, or eliminated it altogether, you should seriously consider canceling it and getting a more user-friendly card.

Late Fees

When is the last time you checked to see what amount your credit card company charges you for a late fee?  The truth is that these fees have doubled in just the past ten years, and that, combined with the reduced grace period, means that the credit card companies are raking in a lot of dough on late fees!

If it’s possible, you should try and send off the check (or electronic transfer) the day that you receive your credit card bill.  There are three reasons why it’s important never to be late.  The first is obvious; you will want to do everything in your power to avoid a hefty late fee.  Next, if you are late, it will likely be reported to the credit agency and you will have a bad mark on your credit report.  The third is the direst, and we’ll discuss it below.

Interest Rate Hikes

Did you know that if you are late--even one time—on your credit card payment, the company will in all likelihood raise your interest rates?  That’s right; one late payment gives them the right to do it.  What’s more, that isn’t just limited to your credit card payment.  Any late payments from any lender that show up on your credit report gives them the justification to raise your rates, so be careful!