How to Save on Credit Card Fees
By Rocky Ramsey
Last year my credit card company sent me a letter telling me
that if my credit card payment was even 1 day late, they would charge me a late
fee of $29. This year they sent me a letter telling me that if my credit card
was even 1 day late, they would raise my rate from my current low rate to
24.99%. Next year I expect them to send me a note indicating they're going to
send Knuckles, their credit card enforcer, over to break my kneecaps if my
payment is late. One kneecap if it's more than a day but less than a week. Two
kneecaps if it's more than a week.
Before you can save on credit card fees you have to know what
they are and where they come from. You've probably received pre- approved credit
card offers in the mail for 0% introductory APR, Low Rates, High Credit Limit,
etc. In order to get the perks, you have to keep your account in good standing
and pay your bill on time. That sounds reasonable.
Here's the unreasonable part: if your bill is late, you go over
your credit limit, or you're late on any bill, even those that have nothing to
do with your credit card, your "default rate" will go through the roof, as much
as 40% in some cases. This means that if you're late paying your utility bill,
your credit card interest rate will be increased. If the bank doesn't post a
loan payment on time, you will pay more interest on your credit card.
I found out another interesting fact by accident. I mailed a
credit card payment about the same time as I always did. When I got the next
credit card statement, I was charged a $29 late fee. Since I had sent the
payment on time, I called the credit card company and told them that I had sent
the payment before the due date and they could tell that by the postmark.
I was told they didn't use the postmark as proof of payment
anymore. The payment had to physically be in their office before it could be
posted. That wasn't good news. For one thing if the postmark isn't proof of a
payment date, I'm not saying that they would do this, but it sure opens the door
for abuse. Short of sending a payment with a return receipt requested, there
would be no way I could prove when they received the payment.
Think about it. If the credit card company charges only 100
people the $29 late fee, that's $2,900 dollars in a month. Add to it the new
higher interest rate as a bonus every month, and you're talking about a big
boost to the company's bottom line. If these fees are incorporated into the
financial structure of the company, this is only more bad news for consumers.
This is the way these things always start. If they had 100 late
fees this month and they included that as income, they'll want at least 100 next
month. Since they aren't going by the postmark, what would stop them from basing
some guy's salary on how many late fees get generated for the month? Nothing
would stop him from having a pile of payments on his desk that he didn't "see"
so that a late fee could be assessed.
Not only that, you've got to deal with the post office. The same
post office that held mail for weeks in South Florida and Washington and other
locations after the anthrax scare. The same post office that had a postal worker
in Chicago who shredded mail instead of delivering it. Locally we had a mail
deliverer who stored months of mail in his spare bedroom instead of delivering
it. All of those bills would've been overdue even if the postmark was before the
After I got the bill with the late fee I called to see if I
could use an electronic transfer from my savings account to pay my credit card
bill to avoid a late fee in the future.
The guy on the phone said, "Sure, for a $10 transfer fee."
"You mean one time?" I asked.
"No, every time you want to transfer money."
"No, thank you."
I paid off the card and have never bought anything with it
Everyone's situation is different, so what works for one person
may not work for another. If you want to know the policy of your card, you need
to check with your bank and credit card company. Many of the new policies have
been included with statements and other junk mail they include with statements
so it may have been overlooked.
I've set up my other cards so that I can pay them online through
my bank's online banking system. Cards that I can't pay online will only be used
under special circumstances, if at all.
Ticking off customers is not a way to get good customers or keep
existing customers for that matter. Something that the credit card companies and
banks need to understand is that without customers they can't exist. It's our
money that keeps them in business. They need us a lot more than we need them.
To save on credit card fees make sure you know what fees are
associated with your credit cards, make sure your payment is in the mail well in
advance of the due date (at least 2 weeks), have your payment taken out of your
checking or savings if there's no fee, or pay it off and use it only for
emergencies. Some stores will also let you make payments at the store rather
than requiring you to mail a payment. They don't seem too keen on letting people
know about this, so you'll have to ask to see if you can make a payment at the
Bankrate.com has reviews of credit cards and more
information about rates and fees. Rocky Ramsey publishes Movies, Money and
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