Credit Card Bill of Rights Explained – Pt.3
We’ve discussed The main points of the Credit Card Bill of Rights but there are a few other points about your credit cards that I think you should know. I refer to them as “hidden fees.” Of course they aren’t totally hidden, you just need to wade through the very small print to find out about them, or find them tacked to your monthly bill.
Late Fees
You know about late fees, of course. And you probably know that they are usually tied to not only a date, but a time as well. If they don’t process your payment before the witching hour, you’ll be socked with a late fee. In Part 1, we covered how a late payment can affect your interest rate now and after February. Consider, though, that most late fees are in the neighborhood of $29-$39 and they get added to your outstanding balance to accrue interest. If your minimum payment is less than the late fee and you only make minimum payments, you won’t even pay down your current balance for another two months. In that situation, if you pay a day late every month, you’ll never pay down your balance.
A little bonus information about late fees
Now I’ll let you in on a little secret about late fees. They can be, and sometimes are, reversed. I was a couple of days late last year. I typically pay my entire balance, although now and then I’ll pay something less than the balance but always well over the minimum; usually 10 times the minimum. When I got my bill the month after the late payment, I called the issuer. They explained that I was two days late and the $39 fee was standard. I asked them to call up my payment history and read it to me. After the man at the other end had gone over my 6-month history, I asked a very direct question, “Is the late fee about risk management or is it about extracting additional money from me?” His response, as you would expect, was that it was about risk management. At that point I asked if the history he had just read was indicative of an account that needed serious risk management. The fee was reversed and removed from the record. My suggestion – if you are a good payer and you accidentally slip up on a payment, try getting it
reversed.
Over Limit Fees
Here’s one you might not know about. Over Limit Fees. I’m sure you know that you have a credit limit. It’s printed on every bill. What you may not know is that your credit limit is a virtual limit. Most issuers will allow purchases over your limit. I don’t know how far over the limit they’ll let you go. I suspect that only the issuer knows. What I do know is that they’ll let you go over that limit and will then hit you for over limit fees. That fee is normally $39 or more for each transaction added to your outstanding balance and accruing interest. Under the new law, the issuers will need to get your permission to let you go over limit. That’s a big change that could protect you but be aware that unless you opt in, you might experience an embarrassing decline of your card.
So there you have all the points of the law. The law is there to protect you but only minimally. In fact, if you always pay on time, the law probably won’t do anything for you but get your rates jacked up to help pay for all the money the issuers will be loosing.
But then again, that usually happens when the government gets involved, doesn’t it?
