Have you ever gone through your credit card statement & noticed some unusual fees? If so, you probably then called your credit card issuer & they explained that you signed up for such and such service which comes with a fee. Of course, by “signing up,” they mean you applied for the credit card & there was an add-on service included in the fine print. Now you’re stuck paying the fee. Anyway, so what exactly are these fees?
The Famous Payment Protector Fee
Credit card issuers frequently offer a payment protector service to new & existing cardholders. The service works like an insurance policy. You pay $0.80 to $0.90 for every $100 of your balance each month (similar to an insurance premium). In return, you have the ability to suspend minimum payments, finance charges & plan fees should you lose your job, become ill, or face some other financial hardship. That all sounds good and dandy but let’s go back to the premium part or you pay $0.80 to $0.90 charges for every $100 of your balance. When you first open the credit card account, you might think that since you don’t have a balance, the fee is $0, so why not enroll in the protection service? But, if you rack up a $8,000 balance, you have to pay $70 to $80 a month just for that protection.
Also, if you already have a high account balance be aware that the credit card issuers may pitch you on the payment protection plan because you are a great candidate for them to make money.
International Transaction Fees Are Always a Killer
Now that we are in summer where travel to Europe is on the rise, many consumers are going to start seeing charges of 2 to 3% for overseas purchases. The credit card companies charge the issuing bank for the currency conversion & then the issuing banks charge an additional fee which goes directly to the consumer. So be aware of those fees & the size of your purchases.
Application Fees Can Be Waived
Some credit card issuers charge a fee for applying. But, don’t be so quick to accept the fee as some issuers will waive it if you make that request. Keep in mind that they want your transaction business a lot more than a one-time application fee.
Review Finance Charges
We’ve found that many individual consumers & small businesses hardly ever review their finance charges on their credit card statements. They take the issuing bank’s word for it. It’s kinda crazy if you think about it. Consumers will spend time looking at tax & tip on a $40 restaurant bill but won’t even take two seconds to review the interest calculation for a $2,000 credit card balance. Not to mention, those small business owners out there that deduct their credit card interest payments should make sure they are deducting the right amount on their tax returns.
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