Three Important Things To Know About Your Credit Card Agreement And Fees You Can Be Charged

North America is credit-driven, of that there can be no doubt. With over 10 billion dollars being paid out every year by cardholders in penalties alone, not only are we spending money, but we’re also neglecting to pay it back. Often, this can be because of a change in employment or financial situation, or because new debtors are often unaware of just how the credit card system works and how they can easily become trapped in a cycle of minimum payments and late credit card fees. Credit card companies are eager to offer cards, and almost anyone can now obtain at least a high-interest low-limit credit card. But all cards, no matter their type or benefits, will come with a credit card agreement that almost no one reads. It is in this agreement that a great deal of useful information can be found, including three fees that can be sprung on a consumer seemingly without warning.

The first are late fees. This one seems simple to avoid, and most people believe they are never caught by it, but there are rules they may not be aware of. Although consumers naturally assume that a “billing period” is one month, it is not written in stone, and many companies have switched over to a 20 day rather than a 31 day cycle. This will be listed in the agreement, but likely not advertised. This means that a cardholder could be charged late credit card fees for payments received on day 21 because they did not make a payment during the billing cycle.

Second is a minimum balance fee. This tends to apply to higher-limit cards and allows the company to charge a small amount for every month that the card does not have a balance on it. This means that if the card is kept at zero, the client will still receive a bill each month for the fee associated with keeping it that low. Third is the fact that interest rates on a credit card can be raised if payments to other creditors, such as a car dealership, are late. While this is not an outright fee, a raise in interest rates for one late payment on another credit account will only result in a greater amount owed to the credit card company itself.

Some of these charges can be prevented simply by reading the credit card agreement and making sure to follow all of the rules laid out. However, it is also worth taking a moment to consider the type of credit card required in a given situation. It is always better to have a card for essentials than one that is used frivolously, as the fees, obvious and subtle, can add up.