Do You REALLY Know How Much Your Credit Cards Are Costing You?
When I turned eighteen I was not aware that my credit history had started. It is all too easy to fall for those many credit card applications that come in the mail. In many instances, young adults complete them without even reading the terms and conditions. This is usually the beginning of the credit card debt trap.
It is sad to say, but so many credit cards today have so many fees attached, that the average consumer can really get into trouble by not reading the fine print. Credit card lenders know that few people actually do read that information, which is why they format it the way they do. Once you take the card and use it for a purchase, you can do absolutely nothing about those outrageous fees you have been charged, other than pay them and close the account as soon as possible.
The first thing that you need to be aware of is the grace period. With most credit cards, you have a twenty-five day period after charges are made before you are charged finance charges or fees, so if you can pay your balance off in full during that time, you can only pay what you used, which is a good thing. If you choose not to pay the balance in full, each month you will receive fees, or interest, on that balance, meaning that if you don’t make a fairly large payment, your balance could go up, rather than down. This is one way that so many people get in trouble with credit cards before they even realize what is happening.
Another fee that many people don’t think about is the late fee. On average, typical late fees start at $35, and can be applied the day after your payment is due, if it is not posted to your account. All you have to do is miss a statement, or mail your payment a day or so late, and you could potentially be in trouble, especially if you are already close to your credit limit. To avoid late fees, you should get in the habit of sending off your payment as soon as you receive the statement in the mail. If you can, try to pay more than the minimum payment due, even if you only send in an extra $5 or $10, it will help. Remember, that when you payment arrives late, you will be charge late fees, your account will be reported negatively to the credit bureau, and your interest rate could be raised, as high as 40% in some states.
Credit card companies must legally tell you about credit card fees. It is up to you to read and understnd the fees before you sign away your debt. Read, research and speak to your parents or a debt counselling service before signing anything. Caveat Emptor!
