There’s always a concern that we’re getting hit with “hidden” fees on our credit card accounts. The fees aren’t actually hidden, of course, since the current laws governing credit card companies make it virtually impossible to impose any fees that we were not made aware of or agreed to.
The problem is that many times we agree to credit card terms without actually reading or understanding what we are agreeing to. In those cases, while the fees might not have been “hidden,” they can certainly come as a surprise.
Here is some credit card advice and information about some of the most common fees that sometimes catch a cardholder unaware or off guard.
Changing Interest Rates. One of the most significant “hidden” fees on your credit card is an increase in the interest rate. If you signed up for your card with a promotional rate, you must remember that you’ll have a rate increase when the promotion ends. Similarly, if your card is one that promises a variable rate (a desirable thing when rates fall) or if you make a late payment, then your rate can change. These types of rate changes generally apply to both new purchases and existing balances. In normal circumstances, your credit card company can only change your rate for new purchases on 45 days advance notice. Because this notice doesn’t require your consent, it’s important to read every letter and notice you receive from your credit card company.
Balance Transfer Fees. You probably receive at least one offer from a credit card company every month to transfer your balance into a new account at a very low interest rate. Sometimes, however, there is a fee that’s charged for the transfer – sometimes up to 5%.
Over Credit Limit Fee. The formerly common practice of charging the account holder a fee if they exceed their credit limit is now “opt in” only. Cardholders who do not opt in will simply have their purchases rejected if the purchase would exceed their credit limit. If you have opted in, you need to make sure you’re not bumping up against your credit limit and incurring those fees.
Late Fees. While you’d probably expect to be hit with a fee if you pay your credit card bill late, you might be surprised to learn how big the fee can be. The fee for a single late payment cannot exceed $25, but that will still seem excessive if you’re only late by a single day. If you have multiple late payments within a six-month period, then the fee can be even higher.
Prepaid Credit Cards Have Even More Issues. Prepaid cards (sometimes mistakenly referred to as “prepaid credit cards” – in fact they’re actually debit cards; no credit is involved) often have significant fees associated with their use and even simply keeping the account open. If you use these cards, be sure to review all the terms closely.
Credit cards are a great convenience, and in some respects a necessity, in today’s world. In order to make sure you don’t pay too much for the privilege of using a credit card, it’s essential to make sure you understand exactly all the fees and charges involved.
There’s always a concern that we’re getting hit with “hidden” fees on our credit card accounts. The fees aren’t actually hidden, of course, since the current laws governing credit card companies make it virtually impossible to impose any fees that we were not made aware of or agreed to.