Have you ever used a credit card? Do you know exactly what fees you pay and how much of your monthly payment goes toward them? If you don't know what you're paying for when you make your monthly payments, you're not alone. Too many of us don't know what we're paying for. And people have said that the terms and conditions of credit cards are too hard for the average card holder to understand. What should a customer do?
First, find out what's available. Fees include 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 bit of a pain for us, but they bring in a lot of money for card issuers. In 2006, they made $25 billion from late fees and other fees. Yikes!
You can take some steps to lower the amount of money you spend on fees. First, sign up for a card that doesn't cost you anything every year. Never use a credit card at an ATM to get cash ahead. When you take out one of these cash advances, you pay an average fee of 3% and interest starts to be added right away. Some cash advances have interest rates that are as high as 25%! That's a waste of money.
Likewise, don't use convenience checks. When you use them, you have to pay a fee, and you have to pay more if you want to return them or put a stop on them. You might have known that there are fees for convenience checks and cash advances, but did you know that you can also pay fees when you use your credit card to buy money orders or lottery tickets? It's best to pay for these things with cash or a debit card.
Foreign-transaction fees will show up on the credit card statements of people who travel abroad. To make matters worse, these fees aren't always correct. Travelers who used their credit cards to buy things abroad early in 2006 can now get their money back. (You can check if you are eligible for this refund by going to www.ccfsettlement.com or calling your card company.)
If you don't want to waste money on hidden fees, you might want to apply for one of the best credit cards with low fees. Kiplinger.Com says this is how the best of the best are ranked: Recent interest rates at Simmons First National Bank (P) were 7.25 percent and 11.25 percent plus a fee for cash advances. This card has a 25-day grace period and no annual fee. There are $29 fees for payments that are late or go over the limit.
Next is the Capital One Platinum Prestige (P), which has an interest rate of 7.9% and a cash advance rate and fee of 19.8%/3%. This credit card doesn't have an annual fee, and you have 25 days to pay before you have to pay interest. There are $35 and $29 fees for late payments and over-limit charges, respectively.
The Pulaski Bank & Trust is the last one (G). The interest rate on it right now is $7.99. There is no extra charge for cash advances, which have a rate of 7.99%. There is an annual fee of $50 and a grace period of 25 days. There will be a $29 fee for both late payments and overcharges.
What's wrong with credit card fees? Even though they're not pretty, you can choose which card you want to carry. Remember that if you don't understand a fee, you can call your credit card company and ask someone to explain it to you. Customer service is all about doing things like this.
