According to Money magazine the credit card late fees that credit card companies charge when you pay your bill past the due date nearly tripled between 1994 and 2004.
During those same years, credit card company revenues declined due to competition and financial markets that favored consumers, which forced many companies to lower their interest rates.
To compensate, credit card companies found creative ways to increase other charges.
Among the worst are credit card late fees, because in addition to the charge itself:
• You could end up with a punitive increase in your interest rate.
• You could receive a demerit on your credit report that may affect your other accounts.
Credit Card Late Fees Are Going Up
Many companies now use a tiered penalty system that is based on your monthly balance, so the more you owe, the bigger the late fee if your credit card payment is late.
In 1994, the average credit card late fee was $12.55. By 2004, the average credit card late fee had risen to $32.65.
And on top of that, your credit card company may exact further punishment by jacking up your interest rate as high as 41 percent.
In Addition to Credit Card Late Fees: Universal Default
Sometimes hidden in the fine print of your credit-card agreement is a feature called "universal default," which allows your credit card company to raise your interest rate even if you pay your bill on time.
Here’s how universal default works: if you are late with a payment to any creditor, other creditors whose agreements with you include a “universal default” clause can increase your interest rate even if your record with them is perfect.
Shrinking Grace Periods Mean More Credit Card Late Fees
Meanwhile, the credit card companies have made it harder for you to avoid making late payments by steadily reducing the length of traditional grace periods. In 1994, the average grace period for credit card bills was 27 days. By 2004, that figure had shrunk to 20 days.
Avoid Credit Card Late Fees: Pay More Often:
Credit card companies may be advertise lower interest rates to lure new customers, but over the past decade credit card fees have nearly tripled. These six tips can help you save money on your credit cards by avoiding credit card late fees.
First: pay your bills twice monthly
• With grace periods shrinking, scheduling two bill-paying sessions every month can help you stay ahead of the game.
• Also, request a due date that is easy to remember and works well with when you get paid and the due dates on your other bills;
To avoid credit card late fees, sign up for automatic bill payment
• An automatic payment will help you avoid credit card late fees by making sure your payments are always on time.
• Be sure to designate a monthly amount that will cover your minimum payment and pay down a part of the principal. If you only pay the minimum payment each month, you will never get rid of the debt.
Avoid Credit Card Late Fees: Pay by Phone
• If you usually send your credit-card company a check by mail, consider paying by phone if your due date is getting close.
• Although some credit-card companies charge a fee for payments made by phone, typically $15 or less, that’s usually cheaper than paying the credit card late fee.
Avoid Credit Card Late Fees:Talk to Your Credit-Card Company
• Don't be Afraid to Negotiate
• If you’re charged a credit card late fee by your credit card company, but you usually pay on time, call and complain.
• Many credit companies will waive credit card late fees at least once for customers with good payment records.
Avoid Credit Card Late Fees: Read the Fine Print
• Checking out all of the conditions and restrictions associated with your card will help you avoid credit card late fees.
• In particular, find out if your credit card is subject to "universal default". If it is, consider switching to a card that doesn’t have a universal default clause as part of its agreement
Why Pay Your Credit Card Bills in Full and On Time?
• Sometimes when people get in a cycle of late payments, they stop thinking about the extra cost. If you often pay credit card late fees, add up how much those fees cost you in a year.
• You may be surprised at how much money you could put into savings if you weren't giving it away to credit card and other finance companies for late fees.
• The best way to avoid credit card late fees and other credit card charges is to pay off your balance every month, and to make sure the payment is on time.
• That may be easier said than done, but living debt-free is a worthwhile goal you can achieve with careful planning, patience, and consistent effort.
Debt Consolidation: This is the most popular and one of the smartest solutions to get rid of all your debts. All you have to do is get registered with a debt consolidation firm and a debt consultant will get in touch with you within the next 16 working hours. The consultant will negotiate with your creditors and get your total debt amount reduced to a major 40-60% while eliminating your late fees and taxes.
Your new monthly payment will be restructured into easy monthly installments within your affordable limits. With a debt consolidation package, you can become debt free within a reasonable period of time. Apart from the above two procedures the best credit solution is to take calculative measures while managing finance. It is ideal to follow a budget plan while dealing with your monthly expenses.
Debt consolidation has helped hundreds of debt struck people and has given them the smoothest and fastest solution for their credit problems. It is time you stop worrying and opt for a debt consolidation program in order to become debt free.
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