Excessive charges and additional fees can be one of the most daunting and difficult parts of paying down a credit card balance. Credit card companies can add numerous fees on top of your payment minor infractions or penalties. Many of them can be avoided, if you know what to look for in advance.
One of the most common types of charges on credit cards and loans is penalty fees. If you pay later than your due date, you will almost always be charged a late fee, unless you have contacted your lender to make a prior arrangement. Even if you have contacted your lender in advance to arrange a later payment date, you could still have interest or an additional fee assigned to your original payment. If you pay with a check and do not have a enough funds in your account to cover the payment, you could be charged with a returned check fee as well as a late fee, if the next check clears after the initial due date. Exceeding the limit on your credit card can trigger much higher interest and penalty fees, which is why it is extremely important to check and pay your balance regularly.
Few people know that credit card companies choose can use your payment to pay down the balance of any individual purchase they choose. This is important because the card issuer will often choose to pay down the balance on a smaller purchase or one with a lower interest rate, so that the higher cost and interest rate items remain on your balance. This practice can result in you paying more over an extended period of time. Speak to your creditors directly about their payment methods and see if there is anything you can do to ensure that your payments reduce your debt as efficiently as possible.
Balance Transfer Charges
Although many cards offer a 0% interest on transfers from on account to another, many still charge a handling fee for the transfer. If you have to make multiple transfers in one session, creditors can still charge for each individual transfer. Ask you card issuer in advance what their policies are and find the least expensive way to transfer money before you take any action.
Cash Advance Fees
In addition to extremely high interest rates, credit card companies typically charge a large one time fee for any cash advance taken out on the credit card. If you are in need of cash quickly, consider other alternatives, such as a payday loan or temporarily pawning an item to cover your needs.
Phone and Card Replacement Fees
If you need to use a phone to make a payment, as opposed to sending it electronically or through the mail, you could be charged with a small fee. This fee is often disclosed by the lender toward the end of the transaction, when the transaction is nearly complete. If you do not wish to pay this fee, ask about it as soon as you get on the phone, to save yourself time and potential cost. If your card is lost or stolen and you need another one sent, you could be charged a replacement fee and possible shipping fee for that as well.