Watch Out For Credit Card Penalties

Credit card companies earn revenue in a variety of ways, the most obvious being the interest the companies charge for the use of credit. But there are other fees that credit card companies charge that you may not be aware of, some of which are new, some of which have been around for a while. Below you’ll find some credit card company tricks of the trade that, once under your belt, you’ll learn to avoid.

1. No grace Period
2. Invitation to skip a payment
3. Lowering your minimum payment
4. Using convenience checks
5. Fees for not using a credit card
6. Over the limit fees
7. Paying late

No Grace Period
When a credit card has no grace period, it means interest begins accruing the instant you make a charge on your credit card. Most credit cards have a few weeks worth of a grace period, but credit card companies have begun eliminating the grace period for a variety of reasons, including missing a payment and not using your credit card–that’s right, just because you aren’t charging anything on your card doesn’t mean you’re not going to get charged for it!

Invitation To Skip A Payment
Credit card companies invite you to skip a payment because it’s profitable to them, not because they know you’re cash strapped and they’re trying to do you a favor. The invitation to skip a payment is really a way for the card companies to earn more interest, likely on larger amounts you’re holding, say, after the holidays. They may also begin charging higher interest rates for doing so, especially if you fall a little behind on your monthly payment. My advice? Don’t skip any payments. And pay more than the minimum. Always.

Lowering Your Minimum Payment
Another trick to avoid is accepting your credit card company’s offer to lower your miminum monthly payment. By doing so, what you’re really doing is earning them more revenue because you are, in essence, extending the amount of time that you will pay off what you owe–thus earning them more interest–money that is coming out of your pocket.

Convenience Checks
While they sound ‘convenient,’ convenience checks are just another way for card issuers to earn higher interest and create more debt for you. Avoid them–I usually just rip the envelope up as soon as I pull it out of the mailbox.

Not Using Your Credit Card Fees
Not carrying a balance, not using your for a certain amount of time, closing your credit card account, these are all reasons credit card issuers may use as an excuse to charge you fees. Make sure you read all of the fine print before you accept and activate any credit cards.

Over The Limit Fees
Going over your limit is not something you should ever do–and if you do, it’s usually your fault. But certain credit card companies can set you up for failure. Some companies send you convenience checks and allow you credit that will, depending on your credit practices, push you over your credit limit. You’ll get pinged with overlimit fees, and they’re getting more and more expensive each year.

Paying Late
Don’t ever pay your credit card bills late–an obvious one here, but make sure to always pay on time. A sneaky trick card issuers are doing now is charging you fees if you’re even 1 minute late–a pretty low thing to do, in my opinion, but apparently legal.

Make sure you’re paying close attention to credit card fees, because you’ll save a great deal of money easily if you avoid doing all of the minor things that will get you pinged by the big credit card issuers–it’s how they make their money.