May 29th, 2008
Does Your Credit Card Company Go For Your Pocketbook?
Last week, CNNMoney.com ran an article titled, “Drowning in debt: Deceptive credit card practices.” It pointed out the many ways a credit card company tries to get at your dollars. Fees, fees, and more fees–late fees and over limit fees as well as annual fees all eat away at your dollars. In addition, if you’re late on a payment, the credit card companies will hike your rates as much as they can! Apparently, some credit card companies not only have a payment due date, but even a payment due -time of day- when the payment has to be in. This is a significant disadvantage for those who still use paper checks or money orders and the U.S.P.S. to pay their bills (score one for online bill pay!).
Another way the credit card companies can hit your pocketbook is by shortening their billing periods. I have been a big fan of Discover Card, partly because they’ve had great customer service for me and partially because they’ve had long, 30 day billing periods. I learned this month, however, that my payment date was being moved from the first of the month to the 28th of the month. I can live with that, but it’s not clear to me if my billing period is being shortened, so I’ve asked Discover if my statement closing date is also changing; no answer yet.
Here are some ways to try to keep credit cards from eating your dollars:
Use a card with no annual fee! So many people want airline mileage cards, but they seem to all charge fees. There’s no way I’ll use a card that has a fee, so I have other reward cards.
Pay on time. Late fees can be very expensive, $29 is typical. Keep that in mind when you’re trying to stretch a few days.
Pay in full! This will keep the interest rates from meaning anything. If you can’t pay in full and are carrying a balance, consider doing a balance transfer to a card with a lower–possibly zero percent–rate of interest.
Use online banking. This will prevent late payments, and since most cards let you pay on their Web site at no charge, save you money on postage too.
If you are late or over limit, call immediately! While they may not be totally forgiving, often the credit card company will agree to waive fees.
In addition, if you are carrying a balance with a hefty interest rate, call to see if they’ll be willing to lower it. They may, they may not, but if you don’t ask you’ll never know.
Remember that a credit card is like a tool: when used properly, it can do great things (build your credit rating, put off needing to hand over cash immediately, give you extra benefits like extended warranties and price protection, and offer many types of reward programs), but when used irresponsibly, it can do great harm. Use them wisely!
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