Credit card bills can be expensive. Sometimes they can be simply too expensive. Depending on how you use your credit cards, and how much you spend, and how disciplined and controlled you are over your own spending, you may or may not have trouble paying your credit card bills when it comes to the end of the month and the bill arrives in the mail. No matter what your situation is however, there is always one thing you will not, under any circumstances, want to see on your monthly credit card bill, and that is a credit card fee.
There are different types of credit card fee and different reasons for incurring them, but the good news is that many of them can be avoided by simply following a few simple rules and keeping on top of your finances and bills. The most important way to minimise the fees you receive from your credit card company is to pay your bill on time and in full each month. Generally if you do this, you will be charged no interest of finance charges at all, and will be receiving all the benefits of a credit card and over a month of credit absolutely free. If you are one of the lucky customers who can manage to maintain your account in this way, you will be very lucky.
However, many people cannot pay their account in full each month, therefore, they incur the most common of all credit card fees, and this is finance charges. Credit card companies actually charge very high interest rates to their customers so if you have the option of borrowing in other ways that may be cheaper it is recommended that you use these methods if you are planning on needing the money for more than a couple of months. It is far cheaper to pay back a short-term loan than to maintain a large credit card balance.
Another credit card fee is a late fee for when you are late in making your monthly payment. Many people who have more than enough money to make their repayments simply through a lack of organisation miss payments and incur large fees. If you are late in making your repayment because you don’t have enough money to make it you may need some debt counselling or other advice to help you manage your way out of this situation.
There are many other fees that your credit card company can impose upon you depending on the company, but being aware of how they are calculated and what sets them off is probably all you need to know to be able to avoid incurring them in the future.
For many people, their credit card appears to be free. Apart from the interest they pay on their outstanding balance at the end of each month, they do not pay any other fees for the convenience of the credit card. While this may be true for some people, for many of them their credit card provider will in fact be charging them various fees. For others it may not be true at all as they have to pay a monthly or annual fee for their credit card.
Credit card fees can come from a variety of sources. The most basic is that the credit card company simply charges a monthly fee for the card. This can be a result of your having a particularly bad credit rating, but in fact, there are some very financially healthy people who pay these credit card fees. This is because some credit card providers charge these fees on their most exclusive and attractive cards, it is a payment that qualifying customers must make if they are to be granted access to the best rates and terms and conditions.
There are also fees for certain specific types of transactions. Some companies charge fees for using credit card checks. There is usually a fee for using your card abroad, especially if you use it to withdraw cash, and there are certain other types of transactions that will incur an extra fee depending on the policies of your specific card provider.
The most hated fees of all however, are the various fines and penalties that credit card companies impose on their customers for failing to fulfil certain conditions. If you are late on a payment, or do not meet the minimum payment level, you will be charged a fine from you credit card company. One thing you should be aware of with such fines is that once they have been levied on you, they cannot form the basis of future late payment fines. That means that if you do not pay the fine within one month, you cannot be fined again for this, so long as you have paid the minimum amount due on your bill.
With all these various charges, it may not be surprising to learn that credit card companies probably earn just as much money from the fees they charge for various services as they do from the interest they charge you on your monthly outstanding balance.
Credit card late fees are a fact of life for some consumers, but they don’t have to be for you. Legally, credit card companies can hit you with pretty much whatever fees they want. On the other hand, you don’t have to pay them, but only if you avoid them in the first place. Here are five sure fire ways you can avoid costly credit card late fees:
1. Pay Before the Due Date. Of course, this makes the most sense. However, this is also the single most important reason why people get socked with fees: they receive their bill and immediately forget about it! When you get your bill, open it up and pay it promptly. Waiting means forgetting and forgetting about your credit card bill will cost you money.
2. Pay on the Internet. If you have access to a computer, then paying online is the best way to make certain that your payment gets to your credit card provider on time. Be careful, as there is still some lag time from when you authorize funds to be released from your checking account and when that payment is finally credited to your credit card account. The gap between the two can be as long as one week!
3. Schedule Automatic Payments. Some credit card providers allow for you to set up a scheduled deduction from your checking account which is then automatically sent to your credit card provider. You should set it up to take money out of your account well before the due date to ensure that your funds are received on time. You can always send in a separate, extra payment if you want to pay down your debt faster too.
4. Question a Late Payment. Even if the credit card company claims that your payment was late, it doesn't mean that you must be charged a late fee. Contact the company and ask them to reverse their charge –- which usually runs between $29 and $39 -- and to expunge their records of your tardiness. You not only want to avoid any fees, you want to avoid their possible notification of your lateness to the three major credit report agencies [Experian, TransUnion, and Equifax]. Any information supplied to the credit reporting agencies can work against you in the form of higher interest rates on current cards as well as on future loans!
5. Go with the Citi Simplicity Credit Card. Now, consumers have a new option to help them avoid late fees: Citi’s new Citi Simplicity card doesn’t charge late fees. Please click the link below for more information about this breakthrough card.
Taking the appropriate action can help you to avoid late fees and allow for you to keep more of your money in your pocket. Become better informed and start saving money today!
Edward Vegliante
Q: I'm starting a new business and want to accept credit cards. It seems that all the credit card processors charge a lot of fees for each transaction. What are these fees?
A: Each credit card processing company operates somewhat differently, but there are a number of fees that are common to all of them. Here are some examples of various fees associated with a typical merchant account.
The Application or Setup Fee is a one-time charge for processing a merchant application and activating your new merchant account. Some processors waive this fee to promote their businesses and attract new merchant accounts.
The Address Verification Service Fee (AVS) is a fraud prevention measure that provides merchants with an additional fraud-detection tool to determine the validity of a sale, which is especially useful when the card is not present. AVS matches a sale's shipping information with the cardholder's billing address. When addresses do not match, merchants should discuss the discrepancies with their customers before shipping orders. AVS only works with cards that are issued in the United States. When AVS is used, there is a per-transaction fee for the service.
The Discount Rate is the percentage charged on the dollar amount of a sale or a returned transaction. Discount rates vary depending on the type of business, such as a traditional brick-and-mortar business, a mail-order/telephone-order business, a restaurant or an e-business. Discount rates also vary depending on whether a card number is keyed into the point-of-sale terminal or swiped into the terminal. Swiped rates are generally lower because of the data encoded on the card's magnetic stripe, which eliminates key-entry errors.
The Secure Payment Gateway Fee is a charge assessed to e-commerce merchants to enable them to process transactions securely over the Internet. This is usually a monthly fee.
The Customer Support Fee is a monthly charge assessed by some processors, which enables them to provide high-quality customer service 24 hours a day, 365 days a year, often in multiple languages and dialects.
The Monthly Minimum Fee is charged to the merchant if the total monthly discount rate amount for MasterCard and Visa transactions does not reach a minimum threshold. If the merchant reaches the minimum threshold, no monthly minimum is charged. Virtually all credit card processors initiate this fee, and generally it ranges from $10 to $30 per month.
The Reprogramming Fee is a one-time charge a processor may assess for converting a merchant from one credit card processor to a new credit card processor.
The Transaction Fee is assessed for each transaction authorization submitted by a merchant, such as a sale or a return. This fee is also charged on transactions where the card is declined. In addition, transaction fees are incurred for American Express and Discover card transactions.
Equipment and Software Fees vary depending on the type of business-traditional brick-and-mortar, mail order/telephone order, restaurant or e-business. Merchants will need certain kinds of equipment and software in order to process credit cards, debit cards and checks. Equipment can include point-of-sale terminals-both countertop and wireless-printers and PIN pads as well as secure payment gateways, virtual products, software and payment options for Internet businesses. Most equipment and software can be either purchased or leased, and prices vary depending on the processor.
Chargeback and Retrieval Fees: Chargeback fees for a disputed transaction are based on the number of chargebacks posted to an individual account ($10 to $25 per final posting). Incoming retrievals are requests for the original transaction receipt that the cardholder's bank requests and are charged whether or not there is a final posting. The industry standard is $15 per incoming retrieval.
Keep in mind, there are numerous considerations to maintaining an effective merchant account, and fees are just one component. When you open a merchant account, ask your credit card processor, agent or sales representative to explain all your prospective rates. Be sure to ask if the transaction processing company has revealed all charges that could apply to your account; you want to avoid any hidden charges. Look for a credit card processor with a reputation for being honest and upfront, whose merchants are fully informed of what is reflected on their monthly statements.
Sometimes merchants shop for discount rates, but rates are only part of the processing picture. Look for a credit card processor that consistently provides top-quality customer service, 24-hour availability and a one-stop shopping experience (i.e., point-of-sale equipment, processing software, training, 24/7 customer service in more than one language and state-of-the-art fraud prevention procedures).
Credit card processing does not have to be intimidating or challenging. Find a processor dedicated to personal interaction with its merchants. Work with agents and sales representatives who communicate directly and honestly with their merchants, explaining each charge and what it covers. Ask questions. Remember, you are the customer. Accepting credit cards can help grow your business.
Late payments can turn an otherwise normal credit card balance into an unbearable burden. Some credit cards charge incredibly high amounts as punitive fees when you fail to pay on time. Thus, you should avoid such situations as the road to bankruptcy is a one way path and late payments are the first steps. You may think it somewhat overstated but the truth is that most people who end up defaulting and ruining their credit score for many years start by missing payments and paying late. Fees pill up, interest rates grow and before you know you can’t even pay the minimum. Believe me when I say, if action is not taken, that’s the beginning of the end. The advice would be then: Avoid paying late and NEVER miss a payment. If your financial situation is complicated you may find the following guidelines useful to avoid penalties and bad notes on your credit report that may compromise your ability to get finance in the future: Don’t just pay, pay in time and form Lawyers have a saying “he who pays wrong, pays twice”. Pay before payment is due, if possible a week before or more. Otherwise, if something comes up you won’t have enough time to solve it and you’ll get penalized. What you may think justifies your late payment surely doesn’t make it for the credit card issuer. Within your credit card bill you’ll find all the instructions regarding payment. Follow them accurately; pay where you are supposed to pay, how you are supposed to pay and when you are supposed to pay. Can’t pay full? Always pay the minimum! If you don’t have money to pay the whole balance, don’t worry. But you should always pay the minimum. In fact even if you’ll be able to pay more in a week or two, pay the minimum amount required first. You can always add up to it by sending additional payments. As soon as your credit card bill arrives you should have the minimum set aside and you should pay it immediately. Once you are sure you won’t be charged a late fee, you can always consider paying a higher amount. But you’ll rest assured that no additional fees will be added to your next bill. Skip-a-payment services Make sure your credit card issuer offers this service. A Skip a payment service let’s you request a waiver on your payment that month when something unexpected happens and you can’t pay on time or in full. Use this service wisely as it usually can be used only once a year. So make sure the current situation is really an emergency and you have no other means to solve your problem. Obviously this service has a cost and you’ll have to pay it the following month so ensure that the fee for such a service is not larger than the amount you’ll be saving for not paying late fees. Change your due date Finally, if your credit card bill arrives at a time on the month you don’t have enough money to cover it and the due date is just too close to your payment date, just contact your credit card issuer and ask them to move the due date to a more comfortable day on the month so you can be sure you’ll have time to arrange payment if there is any problem.
The internet is the place of limitless ideas, products, businesses and anything under the sun. It could also be a place of deceptive offers and persuasive advertisements? Credit cards are already becoming a must-have item nowadays. People are seeking to own one to facilitate their shopping and traveling. Credit cards are very important properties that can be equated to cash. Almost every product that is available for sale can be purchased using the credit card. Restaurants are offering foods to be served for a credit card. Hotel rooms are made available in one swipe. Plane tickets and cruise line fees at hand provided by credit cards. There is nothing to ask for if one has a credit card. Debts are natural to be included in credit cards. And these debts can be directly relative to the card issuer company. There are many things to look up to when credit card and credit card offers is being the subject of the conversation. The internet, being the place of instant shop less the hassle, is also becoming the place of fraudulent offers be it form any product and even to credit cards. There are fake or marketing companies that use the internet to win attention from people who would want to their own credit card. There are a lot of them and they are drastically growing. These companies are not actually lending companies. They can appear to be foundations that offer credit solution and the like but acts and talks the same way as a credit company. There are many ways and strategies that they are doing just to capture the attention of many and rob their money. What are the things that these fake lending companies are saying and what are the offers they frequently brag? Here are some pointers to consider on how to know whether a lending company is a fake or not. -When companies are starting to offer zero interest and low interest at the same time but not telling what type of credit card is going to be given, chances are that the company is not giving away or is not a lending company but a marketing or sales company. This company maybe referring to one-time-credit-cards or gift checks that can be used to purchase products from the company. The card that they will give can never be used in any ATM around the world. -When companies disregard your credit history or situation, then these certain companies maybe just pretending to be real. No lending company will disregard a credit situation of a client. Companies think first of the profits that they can get from the client and will not accommodate any losses due to non-payment. -When companies disregard the age and employment status of a person, there is a higher possibility that these companies are just make-believing. The capacity of a person to pay is determined through his employment status. When this is disregarded, what good can it bring to the lending company? In addition, most banks and lending companies prioritize those younger person rather than the old ones. This is in lieu with the ability-to-pay scheme that lending companies are implementing. There are still a lot of doubtful offers that you may encounter not just in the internet but also in newspapers and other media. To make sure you will not be victimized by these people, try to contact reliable banks and lending companies rather than infamous lending companies.
This month on our two credit card statements are notices informing us that as of Oct. 1st we may be charged "more than two" late fees or over the limit fees" per month. What's going on? Gwen It's estimated that Americans charged $1.8 trillion in 2005 on the 690 million credit cards outstanding. According to a Government Accountability Office study released in September, 2006, 13% of credit card users were assessed over-limit fees and 35% were assessed late fees in 2005. So Gwen has a lot of company. Let's try to do three things. First, understand what these fees are. Next, see how fees are changing. And, finally, what Gwen can do to keep from being hurt. Credit cards have always had fees. Some, like for a late payment, are understandable. Others came along as credit cards took on new capabilities. Think cash advance and balance transfer fees. Still others, like over-limit fees, seem like they shouldn't be possible. You would think that they wouldn't allow you to borrow more than your limit. There are also 'penalty interest rates'. If you're late with a payment or go over your credit limit you could see your rate bumped to 30% or more. The 2006 GAO study looked at fees and penalties. It said that not only were fees increasing, but the credit card companies were doing a lousy job of informing consumers about those fees. The credit card companies are obligated to tell you about any fees or penalties and how they're triggered. Some fees, like paying your credit card bill by phone, are sometimes not clearly disclosed. What Gwen received with her statement was a notice of a change in how fees would be charged. And, as long as she's notified they can get by with almost anything. Late fees have nearly tripled in the last 11 years. And many cards have adopted a 'universal default clause' that says a late payment on any card will trigger the penalty interest rate. Credit card companies say that the higher interest rates and fees are appropriate based on risk factors. If it weren't for the higher fees, they claim that they wouldn't be able to offer credit to riskier consumers. In fairness, the GAO's survey found that (at least among 6 of the largest card issuers) 80% of accounts paid interest rates of less than 20%. So the vast majority of card users are not paying penalty rates. But the study also found that the disclosures were written well above the eighth grade reading level and (surprise!) featured small print. They recommended that the Federal Reserve Board revise rules on credit card disclosures. Now that we understand what's going on we can try to help Gwen avoid problems. The first thing is to recognize that the card issuers get to make most of the rules. And, whether those rules are fair or not isn't relevant. The best she can do is to avoid getting hurt by those rules. Get familiar with each account. The only way to know exactly what's allowed is to read and understand the "Card Member Agreement." Tough duty. But necessary. Watch out for unexpected fees. Like for balance transfers or increasing your credit limit. Know what could trigger fees or penalty rates. Know exactly when your payment is due. Keep a list of due dates for your credit card accounts. If you don't get the bill, it's your responsibility to contact the company and still make a timely payment. If possible, the best thing to do is to join nearly half of the cardholders who paid little or no interest. That's because they do not carry a balance. Obviously, for many people that's not immediately possible. Then it's important to send in your payment as soon as possible. Being seven days early is better than being one day late. If you find it difficult to get your payment in on time, you might want to authorize the credit card company to automatically debit your checking account for the minimum payment each month. You'll probably pay for the service, but that way the payment can't be late. Talk to your card issuer. If your due date falls at a bad time of the month, they'll move it. If Gwen is near or over the limit on any card, she should try to shift part of the debt to a different card. Some fees are even being assessed when an account is merely getting too close to the limit. Your best bet is to keep balances to less than half the available credit. Although the higher late fees are infuriating, they do minimal damage. The real problem is in the universal default clause. Most credit card accounts now have a universal default clause. Suppose your rate went from 15% to 30% on every open credit account. For every $1,000 you owe, an extra $150 interest would be charged each year. So if you're the type of person carrying a $10,000 balance, that one late payment could cost you $1,500 per year. For as long as you have the balance! Gwen is right to pay close attention to her credit card accounts. With newer fees and penalty rates in place, it becomes more important to manage your credit. In fact, it's critical to your financial wellbeing. _______________ Gary Foreman is a former financial planner who currently edits The Dollar Stretcher website . If you'd like to stretch your day or your dollar visit today! You'll find hundreds of articles to help you "live better...for less".
