Credit cards can make our life a whole lot easier and come with plenty of pros. You can earn points; you can shop online; and you can access money, even if you are a little low. However, as convenient as they are, credit cards can also be a constant cause of stress and financial debt.
This is especially the case if you find that you are constantly paying more than you should through credit card fees and penalties. Has this ever happened to you? When a bill or statement comes, you scan it over and then leave it in a big pile of other bills. Perhaps you even label the pile or put Post-It notes on top of the pile? Reminding you to pay the bills, you look over the statements in detail and manage your financial accounts responsibly. Then a month goes by and the pile is still there.
Whatever the reason for letting the pile mound up and the payments bypass their due date, the first step to getting your financial balance back on track is understanding what these fees and penalties really are:
Late fees are the easiest way to incur an unwanted penalty. This simply comes from missing a monthly payment. Unfortunately this penalty can be a hefty one with the average late fee costing $28 per month. To avoid incurring a late fee, pay extra attention to the due date. Circle it on the calendar, set an alarm on your clock or pay it as soon as you open your statement. Do whatever it takes to remember.
Over-the-limit fees are definitely ones to avoid. Over-the-limit fees simply mean you have spent more than you are allowed to borrow. For example, if your credit limit is $5,000 and you have an overdraft of $5010, then you are over the limit and will be charged a $20-$40 dollars penalty fee. To avoid these annoying penalty costs, keep your finances in check. Make a spread sheet of what you’ve spent and what you’ve made. Put yourself on a monthly or weekly budget.
Cash Advance Fees:
Cash advance fees come in the disguise of checks that your credit card company sends in the mail every month. Cash advances are also available at the ATM machines. Convenient, yes, free, no. Although they can come in handy, they also have a 1-3 per cent fee each time you use them. Try not to use cash advances to avoid this small, but annoying fee.
Avoiding Credit Card Debt:
The easiest way to avoid credit card fees and penalties is to pay your balance on time every month. However, if it is not possible to pay the complete balance, always pay at least the minimum Unfortunately this will not save you from the high interest fees but it will stop you from incurring the other penalties. Another suggestion is to make an appointment with your branch manager and discuss the options of lowering some of your fees by changing your contract. Perhaps switching to another credit card with lower interest or a higher credit line would help.
Finally, pick a time every week to go through your bills from the week and pay each one. That way you won’t be stuck with a pile of unpaid bills at the end of the month and several hundreds of dollars in late penalties at the end of the year. There are so many different terms and fees that it sometimes seems easier just to throw the statement into a pile and forget about it. However, once you understand what these fees are about, you can avoid unwanted penalties and keep your credit card statement in check.