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Credit Cards Without Late Fees? What You Don’t Know Can Hurt You
By: Charles Essmeier
Americans know all too well how much it costs to use credit cards. The average
household in the U.S. now has nearly $10,000 in credit card debt. Carrying such
debt is fine, as long as you realize that there are costs associated with it.
The interest rates aren’t particularly low and the fees charged for paying late
or going over your limit can be steep. Late fees of $39 aren’t uncommon, and
they are assessed if your bill fails to arrive by the due date, even if it was
delayed in the mail.
The credit card companies have been listening to consumer complaints about
expensive late fees and several of them have responded. American Express and
Citibank have both recently introduced cards that are both advertised as having
no late fees. There may be a twist involved; Citibanks’s Simplicity card carries
no late fees as long as you make a purchase each month within the billing
period. But no late fees? Aren’t late fees the card company’s way of making sure
that you pay your bill at all? What happens if you don’t pay your bill?
That’s where the fine print comes into play. Your agreement requires you to pay
your bill on time. With the Citibank card, paying late carries the usual fee of
up to $39 if you pay late and haven’t made a purchase during the billing period.
If you have made a purchase within the billing period, but you have still paid
late, Citibank may, at its option, raise your interest rate. In fact, they can
raise your interest rate as high as 23.99% above the prime rate. American
Express will also raise your interest rate if you pay late twice in a year,
though not as high as the 30% or so that Citibank will charge.
With interest rates potentially rising to nearly 30% and applying to your
outstanding balance, you’d be much better off keeping an existing card and
paying the late fee than the hundreds or even thousands of extra dollars you’d
pay on a large balance after the penalty interest rate is applied. Of course,
you can avoid both late fees and interest rate hikes by simply paying your bill
on time and maintaining a small balance or no balance at all. If you want a card
with no late fees, you probably already have one. Don’t pay late, and there is
no fee.
About the Author:
©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro
Marketing, a firm devoted to informational Websites, including
www.End-Your-Debt.com,
a site devoted to debt consolidation and credit counseling. |
