Hidden Credit Card Fees: The Last Straw for Consumers with Too Much Debt can be hidden credit card fees. When a family is barely hanging on to pay their bills many times they make a payment late on one of their credit card accounts. This can trigger a series of hidden fees that can be disastrous for your financial situation.
Credit card companies seem to be able to get away with financial “murder” if you are late on one of your credit card payments. Late fees assessed against you monthly can range anywhere from $10 to even $40 depending on the situation. However, late fees are the least of your worries when you are slow to pay a credit card account. Most credit card companies have an interest rate that is contingent upon the continued, on-time payment of the credit card and the state of your credit score. Therefore, it is very possible that only one or two late payments on one credit card could not only increase the rate on that credit card but your interest rates on all of your credit cards.
This across-the-board increase of interest rates on your credit cards can be catastrophic when your budget is already tight from your current debt load. Such an increase of interest rates can make your budget simply impossible.
A cash advance fee is a special fee that is charged when you take cash from a credit account instead of making purchases. Although there is little discernible difference between a cash advance and a purchase, the rates in which you were charged for cash advances are set into a separate interest accounting. Where you may only be paying 6% interest for purchases you may be charged up to 20% or more for cash advances. Therefore, cash advance fees can quickly overload a monthly budget by greatly increasing the amount that you must repay your credit card company monthly.
Although many credit cards give interest rate and other incentives to transfer a balance to their credit card, other credit card companies many sometimes charge a much higher interest rate or large fees in order to transfer the balance. If you are consolidating your credit cards or transferring a balance, it is important to note both the fees and the future interest rate. A miscalculation on this part can be very costly and destroy your budget.
Credit card companies many times make what would seem to be a mistake. By increasing fees or interest rates beyond the debtor’s ability to pay, the credit card companies could be “shooting themselves in the foot.” Where payments in the past were possible, now payments with the new interest rates and fees are absolutely impossible for the debtor. However, it is very important to note that credit card companies do not care and do not usually have a system to anticipate this overcharging. Many times the overcharging of fees and the increasing of interest rates are the very catalyst that cause credit card holders to be forced to file bankruptcy.
Credit card companies operate for one purpose: to make profit off their credit card accounts. It is very important to make a solid plan to avoid getting into excessive credit card debt. Even a very well managed credit card portfolio can very quickly unravel into a mess that may be impossible to rectify without filing for bankruptcy. The best way to avoid unfair credit card fees or interest rates is to either not use credit cards or to use them as minimally as possible.
~Indianapolis Bankruptcy Attorney John F. Bymaster
Indianapolis Bankruptcy Lawyer John Bymaster also has a video explaining the different hidden credit card fees.