Every year, US credit card holders shell out over $12 Billion in credit card penalties, and this is in addition to interest charges, balance transfer fees, annual fees and cash advance charges! With penalties ranging from $15-$40 or more, it’s a real pain in the butt when they happen to you.It’s illegal for credit card companies to hide credit card fees but they are experts at burying them in fine print or making them difficult for card holders to understand. So it’s important that you know how to reduce the chances you’ll get innocently dinged for late payments and that you know what to look for in the fine print when you are shopping around for credit cards.
Tricks Credit Card Companies Play to Make You Pay
*If you don’t carry a balance, you don’t pay interest, right? Guess what, some credit cards make sure you give them something by charging a fee when you don’t carry a balance.
*If you send your payment with a regular envelope instead of the pre-printed envelope that came with your bill, some credit card companies will wait up to 5 days to record your payment after receiving it. Others may hold up your check processing if you write something in the “memo” area while it gets passed between departments.
*A few years ago, as long as your envelope was postmarked by your due date you were all right. Now most credit card lenders require your payment to be in their hands to count as on-time.
*Many credit card companies have chosen to shorten your billing periods from 31 to 20 days. That means more payments per year and less time to get your payment in.
*Some credit lenders purposely send out your statement a bit late so you have less time to get your payment in.
*If you get dinged with a penalty and it pushes your balance above your credit limit, guess what – that’s right, another fee plus you’re likely to see your interest rate increase also.
*A universal default clause gives your creditor the right to raise your interest rates when you miss a payment on another bill. Not all credit cards have this clause, but an estimated 40% do according to the Institute for Consumer Financial Education.
What you can do:
1. Set up automatic withdrawal from your checking account through online banking. Just make sure you always have enough money when your payment typically goes out or you’ll get smacked with an overdraft charge.
2. Send in your payment by mail the day you receive your statement (and use the envelope they provide you).
Check your statements each month for late fees to make sure you’re not getting penalized for one of the above tricks unknowingly or as a convenient “error.”
If you dispute your credit card penalty, you may have some clout if you carry a balance, threatening to move your balance to a low APR credit card. Rather than lose your business, your credit card company may reverse the fee. Even if you really did get your payment in late, if you make a call, you’ll probably get your penalty credited to your account if it’s your first penalty.
About the guest blogger:
Linda Bustos writes about using credit cards wisely for CreditorWeb, where
you can learn about credit cards and compare credit card offers online.