How to Save on Credit Card Fees

By: Rocky Ramsey - [other]
Posted 06/23/04

Last year my credit card company sent me a letter telling me
that if my credit card payment was even 1 day late, they would
charge me a late fee of $29. This year they sent me a letter
telling me that if my credit card was even 1 day late, they
would raise my rate from my current low rate to 24.99%. Next
year I expect them to send me a note indicating they're going
to send Knuckles, their credit card enforcer, over to break my
kneecaps if my payment is late. One kneecap if it's more than a
day but less than a week. Two kneecaps if it's more than a week.

Before you can save on credit card fees you have to know what
they are and where they come from. You've probably received
pre-approved credit card offers in the mail for 0% introductory
APR, Low Rates, High Credit Limit, etc. In order to get the
perks, you have to keep your account in good standing and pay
your bill on time. That sounds reasonable.

Here's the unreasonable part: if your bill is late, you go over
your credit limit, or you're late on any bill, even those that
have nothing to do with your credit card, your default rate
will go through the roof, as much as 40% in some cases. This
means that if you're late paying your utility bill, your credit
card interest rate will be increased. If the bank doesn't post a
loan payment on time, you will pay more interest on your credit
card.

I found out another interesting fact by accident. I mailed a
credit card payment about the same time as I always did. When
I got the next credit card statement, I was charged a $29 late
fee. Since I had sent the payment on time, I called the credit
card company and told them that I had sent the payment before
the due date and they could tell that by the postmark.

I was told they didn't use the postmark as proof of payment
anymore. The payment had to physically be in their office before
it could be posted. That wasn't good news. For one thing if the
postmark isn't proof of a payment date, I'm not saying that they
would do this, but it sure opens the door for abuse. Short of
sending a payment with a return receipt requested, there would
be no way I could prove when they received the payment.

Think about it. If the credit card company charges only 100
people the $29 late fee, that's $2,900 dollars in a month. Add
to it the new higher interest rate as a bonus every month, and
you're talking about a big boost to the company's bottom line.
If these fees are incorporated into the financial structure of
the company, this is only more bad news for consumers.

This is the way these things always start. If they had 100 late
fees this month and they included that as income, they'll want
at least 100 next month. Since they aren't going by the
postmark, what would stop them from basing some guy's salary on
how many late fees get generated for the month? Nothing would
stop him from having a pile of payments on his desk that he
didn't see so that a late fee could be assessed.

Not only that, you've got to deal with the post office. The same
post office that held mail for weeks in South Florida and
Washington and other locations after the anthrax scare. The same
post office that had a postal worker in Chicago who shredded
mail instead of delivering it. Locally we had a mail deliverer
who stored months of mail in his spare bedroom instead of
delivering it. All of those bills would've been overdue even if
the postmark was before the due date.

After I got the bill with the late fee I called to see if I
could use an electronic transfer from my savings account to pay
my credit card bill to avoid a late fee in the future.

The guy on the phone said, Sure, for a $10 transfer fee.

You mean one time? I asked.

No, every time you want to transfer money.

No, thank you.

I paid off the card and have never bought anything with it
again.

Everyone's situation is different, so what works for one person
may not work for another. If you want to know the policy of your
card, you need to check with your bank and credit card company.
Many of the new policies have been included with statements and
other junk mail they include with statements so it may have been
overlooked.

I've set up my other cards so that I can pay them online through
my bank's online banking system. Cards that I can't pay online
will only be used under special circumstances, if at all.

Ticking off customers is not a way to get good customers or keep
existing customers for that matter. Something that the credit
card companies and banks need to understand is that without
customers they can't exist. It's our money that keeps them in
business. They need us a lot more than we need them.

To save on credit card fees make sure you know what fees are
associated with your credit cards, make sure your payment is in
the mail well in advance of the due date (at least 2 weeks),
have your payment taken out of your checking or savings if
there's no fee, or pay it off and use it only for emergencies.
Some stores will also let you make payments at the store rather
than requiring you to mail a payment. They don't seem too keen
on letting people know about this, so you'll have to ask to see
if you can make a payment at the store.

Bankrate.com has reviews of credit cards and more information
about rates and fees.

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Rocky Ramsey publishes Movies, Money and More - Movie reviews,
entertainment, humor, money, contests, sweepstakes, freebies,
and more http://www.MoviesMoneyandMore.com

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