Credit Card Charges To Watch For That You Might Not Be Expecting
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by: PamelaLucas
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In April 2006, the OFT made a case against banks and credit card companies and the unacceptably high penalty charges they were inflicting on their customers. As a result, these companies have had to reduce the sums (previously as high as 20 per penalty charge) they had been charging their customers for late bill payments etc, to a maximum price of 12. In order to make their money back, however, the banks now add very high interest rates on default charges, meaning that the 12 charge is more like 14 once the interest is added.
Credit card charges to watch for are: late payments, exceeded credit limits and returned payments. However, banks and credit card companies won't immediately alert you to these charges, but will include them in the 'new transaction' part of your statement, meaning it is your responsibility to read your statement very carefully so you can act quickly if need be and avoid an increase in the penalty charge or interest charged on that penalty.
Some companies are less strict than others about charging for misdemeanours. For example, if your payment takes a day or two to reach them (say there is a national holiday or a weekend which delays your funds being cleared from your bank account), they might let the charges go if you contact them soon enough.
Other credit card charges to watch for are charges for repeat statements - if you are questioning previous penalties, for example, and need to refer to past statements you may have lost. Although they are permitted to charge you a nominal sum for duplications, these should not be very high; you can check with consumer groups how much they should be charging you. You may also request a full list of charges from your card issuer, which they are obligated to provide you within 40 days. If you are checking how much you have been fined historically, you will also need to calculate how much interest you have been charged - this may have been unreasonably high in the past, in which case you have a case against the credit card company.
A recent trend occurring in the credit card industry is offering a 0% deal on balance transfers, which sounds great on paper, but did you know that they often charge a balance transfer fee, which is not obvious in their literature or advertisements. Currently, many credit card companies will offer up to 13 months of 0% interest on balance transfers, sometimes longer, but only three months of 0% on any new purchases you make during that time, which means that if you transfer your balance and spend on your card as well, the high rates of interest charged on the new purchases, once the first three months are over, negates any interest charges you may have saved on the transferred balance. I can make sense to keep two credit cards to reduce these charges, one for balance transfers and one for buying new items.
Finally, another credit card charge to look out for is the 'low-use fee', which is now a regular addition to taking out a contract with a new credit card. Historically, it was typical for banks to charge their customers for a 'privilege' account, which might have lower insurance rates for example. Now, though, the industry has begun charging their customers for infrequent usage or not using their cards, which means that cautious customers who were careful only to use their cards in emergencies are now being charged. It is wise to always check the small print for fees of this kind before signing any new contracts with credit card companies.
About the Author
Pamela Lucas, a freelance writer keen to help consumers make informed credit decisions - suggests it is important that before you apply for, or renew your credit card you read carefully the credit card charges in the small print.
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