Sneaky Costs Increases From Credit Card IssuersJanuary 30, 2011 - 8:50 am
The Credit CARD Act passed in 2009 limited many of the ways issuers can charge cardholders. However, that hasn’t stopped them from coming up with other ways to trick consumers out of their money. Credit card companies find the smallest loopholes in the law and use them to charge additional fees. Here’s what you should watch out for.
Due Dates That Fall on the Weekend
The new rules state that issuers can only charge a late fee on days the office can’t receive payments because the mail doesn’t run or on days the office is closed. Otherwise, the card issuer must accept payment on the next due date. Most cardholders would think this meant due dates that fall on the weekend are exempt from late fees
Credit card issuers can and do still process payments on these days. So if your due date falls on the weekend or even a holiday, send your payment in advance of the due date to avoid paying a late fee. Otherwise, you’re taking a gamble on whether the card issuer accepts payments on that day.
Disguised Inactivity Fees
Credit card issuers are prohibited from charging inactivity fees when your account remains dormant for a certain amount of time. However, card issuers have found a way around this rule. Instead of charging an inactivity fee, they instead assess an annual fee that’s waived when you make a minimum amount of charges on your credit card. The impact is still the same, you’ll pay a fee when you don’t use your credit card and you won’t pay a fee when you do use it. Look for tricky wording around annual fees in your credit card disclosure when you apply for a credit card.
Finance Charge Rebates
Perhaps the trickiest credit card fee of all is the finance charge rebate. Under the new rules, credit card issuers can only raise interest rates in certain instances. For example, they can’t raise your interest rate because of a late payment unless you’re more than 60 days late on your payments. That’s two consecutive late payments.
While they can’t raise your interest rate after a single late payment, they can revoke a finance charge rebate, and that’s what they’ve been doing. Some credit card issuers have given out finance charge rebates as long as cardholders make their payments on time. However, if you make a late payment, the rebate is revoked and your interest rate increases.
Shorter Billing Cycles
Your billing statement must be mailed 21 days before your payment is due. Somehow credit card issuers have figured out a way to shorten billing cycles so they don’t have to mail billing statements so soon. The result? You get less time to make your credit card payment and you end up late.
Can you get around this? Sure, instead of waiting for your billing cycle to come in the mail, get in the habit of checking your account online to find out your payment information. That way you can get the quickest notification. Payment due dates are supposed to fall on the same day each month, so write them on your calendar and don’t rely on your credit card issuer to tell you when to pay.