Credit Basics
Here are a number of general fees to be conscious of:
Annual Fee - An annual fee is what you pay to have a credit card. The amount of the annual fee could vary from card to card. Some cards that offer benefits such as frequent flyer miles may have a higher fee. But do yourself a favor and research as many cards as possible. There are cards that have no annual fee and you may be able to find a card that matches your financial needs.
Late Fee - This is a fee you pay the bank or credit card issuer if your monthly payment is received after the due date. The late payment fee will differ, so again, do your research and find a credit card that charges the least amount if you happen to be late on a payment. Also, another bad thing about late payments is that they show up on your credit report.
Over Limit Fee – Also known as over-the-credit-limit fee. Each credit card has a credit line that is usually found on your lender's review of your credit report. If you go over your credit limit a penalty will be assessed each time it happens.
Returned Check Fee - If the check you send your credit card company bounces, you can be sure that they will add an additional fee for the returned check. And your bank will gladly charge your checking account for this mistake. It is called an overdraft fee.
The Back of Your Statement
The fine print on the back of your credit card statement is also packed with very important information. Here are some points you should look for:
Cash Advance Fee - This fee is charged if you use your credit card for a cash advance. This may be a flat fee or a percentage of the cash advance.
The interest that is associated with cash advances is usually higher than the rate you pay on purchases you ordinarily make with your credit card. You will probably be paying off that higher interest rate until you pay your credit card bill in full. To ensure good credit card management, try to avoid taking cash advances from your credit card.
Lost or Stolen Cards - As soon as you realize your credit card has been lost or stolen, report it
immediately. A number to call is on the back of your credit card statement. If you contact the credit card company before the thief uses it, you will not be responsible for these charges. If you do not, you will be responsible for the first $50 of charges.
Read the cardholder agreement or yearly disclosure statement that comes with your credit card to learn more about lost or stolen cards. If you phone your creditors about a lost or stolen card, document the important information regarding the card and save it so you will have it for future reference.
The situation changes dramatically if a family member or someone you know uses your card without your permission. You will then have to take legal action against them to have the unauthorized charges eliminated from your account.
Other Fees - Some credit card companies charge a fee if you pay by telephone. They may also charge a fee to cover the costs of reporting to credit bureaus, reviewing your account, or providing other customer services. Read the information in your credit card agreement to see if there are other fees and charges.
Credit Card Ownership
When you take ownership of a credit card you are taking on a financial risk. Educate yourself so you minimize the risk – learn about the credit card by reading your monthly statements. Be diligent. If you start to lose interest in your credit card statement and do not practice proper credit card management, it could be very damaging to your personal financial situation.
