Interest, fees, and penalties are creditors’ bread and butter. They are an integral part of benefits and conveniences that credit cards give you. They are like a small nasty fly that has stuck to your spoon with some really nice nectarine jam. They can poison the enjoyment. But if you are careful with your jam pot, you can indulge yourself.
Actually, it is ok to pay $ 15 once a year if you re late with your monthly credit card payment, no matter what balance you carry on your plastic. You will not go bankrupt. But imagine that your late payment fee is tied to your balance. In this case you will, probably, would not want to make even the smallest financial misstep.
Some of the penalties are really harsh. If you carry a balance of over $ 1,000 and you are at least two days late with your payment you will be imposed a penalty fee of $ 39. And such fees tend to become a new standard.
The reason for such strict penalizing measures is the last year mortgage crisis. Credit card companies are facing enormous losses after thousands of card holders have filed for bankruptcy. So, in order to make it up somehow for the credit consumers’ outstanding debts that card issuers had to write off, lenders stick to high fees and default rates policy. This is found to be the easiest and the most effective way to recoup the losses.
SomeÂ StatisticsÂ onÂ PenaltyÂ FeesÂ
Let’s take a look at the figures provided by the statistics experts for three of the top US credit card issues.
Discover credit card holders are to pay $ 15 late fee on balances of up to $ 100. A $ 25 late fee is accrued to a balance from $ 100 to $ 1,000. If you carry a balance of $ 1,000 and more you will have to pay $ 35 if you are late with a monthly payment. As for over-the-limit fee â€“ it is just the same.
Citibank credit cards get accrued a $ 15 late fee on up to $ 100 balances. Balances from $ 100 to $ 1,000 â€“ just like with Discover $ 25. And $ 35 late fee on $ 1,000 and more balances.
And you pay $ 35 if you go over the limit.
Bank of America is a record breaker among these three issuers. They charge $ 19; $ 29, and $ 39 late fees respectively. Over-the-limit fee makes up $ 35.
American Express credit card issued by Bank of America charges 25% interest on cash advances. Now, just try to sum up all these charges and think, is it possible to pay off a large revolving balance when nearly all of your monthly payments go to cover any small deviations from credit card code?
So, how can you avoid those fees and penalties?
Before you apply for a credit card, do some research and compare several offers’ terms and conditions. I’ll remind you once again about the importance of reading the fine print. Talk to your friends and family about their card deals and companies they use. Ask them whether they are satisfied with the quality of credit card services.
Learn the tactics of negotiating a better deal. Your knowledge is your main weapon against high penalties, fees and default rates. And train your memory and educate discipline and punctuality in order to be on time with your payments.