Taking
the time to carefully read and understand your credit card agreement
now will help you save money by avoiding unnecessary fees or climbing
interest rates later down the road.
The next time you open your credit card statement, take a closer look
at the small insert titled “changes to your credit card agreement”. You
know the one I’m speaking about. It’s that small, folded paper written
in legalese that you promise to read some other time (but of course
that time never comes) or you just discard it with the other “junk”
inserts.
First and foremost you must understand that using your credit card
after you’ve received this notification results in your automatic
“agreement” to the new terms in the notice. To prevent these new terms
from affecting your account you must stop using that credit card
immediately or by the date given in the notification statement.
The most common modifications to credit card agreements include new
APR’s (annual percentage rates), new fees and/or changes to existing
fees, or a change to the grace period on your account. The grace period
is the number of days during which any credit used for purchases may be
repaid in full without incurring a finance charge.
Not knowing or not keeping track of the dollar amount limit on your
card is another trap you should avoid. Credit card issuers will allow
you to charge a small amount over the limit set on your account.
However, don’t be surprised when you get hit with an “over limit fee”,
usually around $35.00 or higher, on your next statement. Also, be
prepared for your APR to be increased if you go over your credit limit.
You’ll also trigger an increase to your interest rate if you miss your
payment due date. Some companies consider your payment late if not
received by noon or 1 p.m. on the date due. Along with the higher rate,
you’ll also pay a “late fee” of $29 on up. Be sure to use the company’s
preprinted envelope when sending your payment. These envelopes allow
the pre-printed bar code to be scanned by the post office so that it
can be delivered more efficiently.
If you’ve counted on those few extra days from the time you mail your
check and the time the check clears your bank, beware! Many credit card
issuers have switched from the traditional method of processing checks
to a new electronic process. This new system shaves off a day or more
from the traditional method it normally takes for your check to clear
by electronically debiting your account.
If you’re considering paying your credit card bills online, check to
see if any additional fees will be charged for using this type of
payment. I recently received an e-mail message from one of my credit
card companies announcing how easy it would be to make my payments
online. Included in fine print at the bottom of the e-mail was this
note - “A fee of up to $14.95 may be charged for this service and will
be deducted from your checking account”. Hmmm, spend 37 cents on
postage and mail my payment five days before the due date or pay now
and get charged an additional $14.95 fee? I’ll bet you can guess which
choice I made.
Taking the time to carefully read and understand your credit card
agreement now will help you save money by avoiding unnecessary fees or
climbing interest rates later down the road.
