Credit cards and their fees

During the past ten years, Americans have fully embraced the idea of using credit cards to make purchases. The average American household owes nearly a five-figure sum in credit card debt, and as a result, the credit card issuers are reaping all time high profits. One of the reasons that the credit card business is so lucrative is that a tremendous number of their borrowers do not use their credit cards wisely.

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Anybody with excellent credit can easily obtain a major charge card that has a favorable interest rate of 10% or less. A late payment can lead the credit card company to raise the interest rate on the account. A lot of customers fail to pay their bills in full and on time and that can lead to penalties that range from $15 to $29. A single late payment could cause the interest rate to rise substantially, and there are a lot of charge card customers who now pay interest rates of as high as 30% per year. So that you might keep an affordable rate on your credit card, all the cardholder must do is pay their bills when they are due.

Most credit card firms will waive a late fee - once. A few companies may refuse to waive late fees of any sort, but it's worth the cardholder's time to ask, just the same. Interest rates that are greater than 20% make it pretty difficult for anyone carrying a balance to pay off their bill in full, so paying late is something that is best avoided, if possible. If you pay your bill late once and receive a late fee, it might be worthwhile to contact your credit card lender and request that they eliminate the fee. Should your credit card lender deny your request to waive a penalty fee, it may be worth your while to look out for a different card.
 

It is often possible to save money by relocating a balance to another card with a lower interest rate. Aggressive competition in the lending industry has led to a flurry of advertising where customers routinely receive advertisements in the mailbox for low interest credit cards with excellent promotional offers. It is not unusual to receive an offer in the mail for a credit card with a short term rate of less than five percent annually if you transfer your present balance to the new credit card account. Be aware that low promotional rates often apply to moved balances only, and might not apply to new charges. Higher interest rates may apply to existing outstanding balances after the promotional time expires, and the new, higher rates may even be applied retroactively. Cardholders are advised to carefully read the fine details in the cardholder agreement before transferring a balance from one account to another. Keep in mind that short-term rates are frequently limited in time; typically the maximum is six months or less.

A number of nice tips for reducing costs are:

• Take some time to do research in order to locate an account with the lowest interest rate.
• A convenient way to pay on time is to pay on the Internet; this eliminates the risk of a check being lost or delayed in the mail. Regularly make your payments promptly.
• If it is possible to pay cash, then pay cash. Use your plastic attentively.
• Always pay your outstanding balance in full, if possible.
• Try not to take cash advances unless it is absolutely necessary; the costs and interest can be prohibitive.
• Move balances from high-interest accounts to affordable accounts. Keep a sharp eye out for offers with low promotional interest rates and transfer your balances to those accounts.

These easy steps will help keep the substantial costs of borrowing to a minimum.