|
Credit Cards
Credit Card
Basics:
-Credit
Card Benefits
-Glossary
-Applying
for
the Right Card
-Card
Offer Pros & Cons
-Cash Advances
-Balance Transfer Tips
-Smart Credit Card Use
-Going Over-the-Limit
-Credit Card Scams
-Delinquency Rates
-Paying Bills on Time
-Credit Card Insurance
-Fees
& Costs
-Student
Card Guide
-Unsecured
Offers
Card Offer Details
Mortgages
Auto Loans
Personal Loans
Credit Reports
Debt Consolidation
Home
-Taxes
-Managing Money
-Credit Help
-Checking Accounts
|
CREDIT CARD FEES
Credit card companies have to make for the generous
services they offer. Detailed below is information
outlining the most common credit card fees.
Annual Fees
This is a fee often required by credit card
companies for having an account. Most credit cards with
rewards will have a fee associated with them. Typical
fees range between $25 and $50. However, if you have bad
credit, annual fees will be higher. The “Schumer
Box” in the rates and terms section of a credit card
offer will detail the annual fees of a credit card.
**when
applying for a reward card, you should always make
sure that the benefits program will outweigh the annual
fee costs.
Bill Payment Fees
It is very common for credit card companies to
charge you a fee when paying your bill online or over
the phone. If this is the case, pay your bill via
regular mail. It makes no sense to pay extra just for
making your credit card payment via phone or Internet.
Grace Period
Most credit cards will offer a 20-30 day grace
period. This is a time frame that allows you to pay your
credit card balance without being charged interest.
Therefore, you should apply for a credit card with a
long grace period if you like to use your credit card
regularly, and pay your bills on time every month. If no
grace period is offered with your credit card, then you
will be charged interest as soon as purchases are made.
Introductory Rates
It is very common for credit cards to have an
introductory rate for the first few months of
membership. But, how long does the intro last for? Also,
will it apply to only new purchases or balance transfers
as well? Also, be aware that if you are late on your
payment during the intro period, it is very likely that
you will lose the introductory rate. In some cases,
interest will be enforced retroactively on a debt if the
amount is not paid off before the conclusion of the
introductory period.
Penalty Rate
When you are late on your payment, your initial interest
rate will rise as a result. This is a penalty rate
clause that is commonly enforced by over 75% of credit
card issuers. This clause states that your rates will
increase significantly if you are late or miss a
payment. The average penalty rate on a credit card is
around 23%. This is a costly increase for most credit
cards, especially if you have a low rate of 6-12% APR.
Credit card issuers will lower your APR after about 6
months of on-time payments.
Universal Default Clause
This is an increase in interest enforced by your
creditor that occurs when you are late on a payment for
any of your accounts, not just their account. For
example, the APR of your credit card can increase to the
penalty rate if you late on your car loan payment.
Credit card issuers will check your credit report to
determine you payment activity. You can avoid the
universal default clause by making sure you pay your
bills on time every month.
Over-the-Limit Fees
Occur when you spend more than your available credit
line. Typical fees are between $29 and $35.
In conclusion...
Even with all of these hidden charges, credit cards
are still one of the most convenient, lease expensive
methods for borrowing money. Make credit cards work for
you! Avoid most of these charges by paying your bills in
a timely manner! |
