Credit Card Debt - How To Avoid Unnecessary Fees - Part 3

Number Four - Late Payment Fees

Late fees provide the US credit card industry with approximately $14 billion of additional income every year. So in an attempt to bolster their profits, lenders are becoming increasingly strict in the way that they apply these penalty fees.

Repayment periods are becoming shorter, so you may not have as long to pay your bill as in previous years. Whereas the repayment grace period used to be the full month, now you may only have 20 or 25 days to make your repayment

And the end result? More people miss the payment deadline and have to pay a late payment fee which can range from $20-40.

And these rules are being strictly enforced, with penalties due even if your payment is only a day late. In fact, a number of lenders have set a repayment time on the due date, so you could end up having to pay a late fee even if you miss the deadline by minutes. This type of situation is increasingly common due to the ability to make payments online.

But that's not all, if you don't use the pre-printed return envelope supplied with your credit card bill, the terms and conditions of some issuers allow them to record receipt of your payment up to five days after it arrives. So they can even punish you for using the wrong repayment envelope!

But even worse than that, a recent report has claimed that some credit card providers are delaying the sending out of bills so that their customers incur late payment fees. For example, your statement may say that it was sent on the 1st, but it might not have been sent until the 24th when it is due for repayment on the 25th of the month. You would get charged a late fee and blame the postal service.

Unfortunately, it would be hard for the authorities to clamp down on this type of behaviour as there are so many factors that could explain why the bills are arriving late.

However, there are three ways to avoid this problem; apply to pay your credit card online, set up an automatic monthly payment from your bank account to your credit card account or move to a provider that you trust, if you can find one!

All of these conditions are used to trick more people into paying more credit card fees. And once you've missed a payment date, most lenders will view you as nothing more than an opportunity to increase their profits.

In many cases you'll be charged a much higher rate of interest on your debt. And if all your creditors communicate, one late payment could lead to an interest rate hike on all of your debts.

Any special offer or low rate deal that you had on your credit card will be cancelled. This can be extremely expensive if you had a 0% interest rate. Alternatively, you may have to forfeit your monthly grace period, which means that you'll be charged interest in your purchases from the moment of the transaction.

And if you're close to your credit limit, a late fee can push you over the edge which will automatically trigger a fee for going over your credit limit. Shocking, but true!

So if you want to avoid these late fees and all the problems that they create, make sure that you set up automated withdrawals from your bank account to your credit card every month.

Next: How To Avoid Unnecessary Credit Card Fees - Part 4

Previous: How To Avoid Unnecessary Credit Card Fees - Part 2

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