Have you been a loyal card holder for a long time, but still think your fees and interest rates seem high? You’re not alone. When the Federal Open Market Committee (FOMC) cut federal fund rates down to 4.75%, stock holders rejoiced.

Card holders, on the other hand, didn’t do much of anything. That’s because card rates have stayed pretty much the same for the past two years. But that doesn’t mean you should settle for inferior terms.

Competition is stiff in the credit card industry, with new cards and new products rolling out all the time. You’re actually doing your card company a favor by staying with them. They want to keep you as a customer if you carry a balance, because they want your interest payments.

(more…)

Do you have credit cards? Do you know exactly which fees you pay, and how much of your monthly payment is devoted to such fees? If not, you’re in good company; too many of us don’t know exactly what we’re paying for when we make our monthly payments. And card companies have been accused of making credit card terms and conditions too complicated for the average card holder to understand. What’s a consumer to do?

First, know what’s out there. Fees come in the form of annual fees, late fees, penalties, fees for cash advances, fees for international purchases, and even fees for paying your bills over the phone. Fees are a slight nuisance to us, but they are big business for card issuers, who took in $25 billion in late and other fees in 2006. Yikes!

There are some steps you can take to reduce the amount of money you pay out in fees. First, sign up for a card that does not charge an annual fee. Never use a credit card to take out a cash advance at an ATM. Those cash advances incur an average 3% fee upon withdrawal, and begin to accrue interest right away. Some interest rates on cash advances can reach 25%! That’s throwing money away.

(more…)

There are many reasons to avoid carrying a large balance on your credit cards. Large balances can negatively impact your credit score. They will cause you to use your hard earned cash to pay interest. Now there’s one more reason to avoid carrying a large balance: if you make a late payment, your penalty might be tied to how much you owe the card company.

It’s true; card companies make their money through fees, penalties, and interest. But some of the penalties are severe, such as what seems to be the new standard: a $39 late fee on balances of $1,000 or more. And that penalty can come from being just two days late on a payment.

If you think this seems a bit harsh, you’re right. Fees and penalties have never been stricter. The mortgage crisis is to blame; with so many bad debts being written off by home buyers filing bankruptcy, card companies are facing record losses. They are trying to recoup these losses however they can, and fees and penalties are the fastest way.

(more…)

Did you know that some credit card companies purposely send their customer bills out so late in the billing cycle that you would literally have to submit payment within days of the bill arriving in order to have any chance at getting the payment in on time? It’s a tactic that many of the companies use to increase the amount of money they earn off their customers on the late fees. By law credit card companies must send the bill at least 14 days before payment is due. With mail taking up to 3 days to be delivered in each direction, depending on where you live you may only have 8 days to make the payment.

You can avoid paying unnecessary late fees in a variety of ways. Don’t credit card companies make enough on you off the interest rates? Check your statement carefully each month to ensure that you’re not being charged late fees, even if you’re confident you’re mailing your payments out on time.

(more…)

By federal laws, credit card fees cannot actually be “hidden” from consumers, but that doesn’t mean that all credit card users fully understand how they are charged or what instances will result in fees or increases to existing rates. Sometimes, the fees are provided in the small print of the back of your statements, or only in the account disclosure statement you receive when you first open the account- so it’s easy to over look the fine details of credit card fees- and that is how they got the name “hidden”.

The only sure way for someone to skip the sometimes ridiculously high fees associated with credit cards is to pay their bill before it’s due, each and every month. In 1998, cardholders paid about $4.8 billion in penalty fees- which seems like a lot until you consider the fees of 2005- a whopping $12 billion. This leads to the conclusion that people are not paying their credit card bills on time and are not avoiding the penalties associated with late payments!

(more…)