Where there is a credit card agreement there is always a host of fees which are generally there to be applied if the card agreement is violated. Whilst it is inevitable that each credit card lists a number of related charges there is no reason for the savvy consumer to pay any of them, as they are all avoidable with good financial management. There is one credit card though which still carries a hugely imaginative range of charges which illustrates the possibilities which banks have to make a fool of their customers.
Cunning charges levied by one crafty bank include a $45 processing fee; an annual one off fee of $75; a subsequent annual fee of $75 (obviously the bank interprets the phrase ‘one off’ by some bizarre calculation which flies in the face of the use of English); an additional card fee of $29; a credit limit increase fee of 50% of the credit increase; a fee of $3 per requested statement; an one off internet access fee of $3.95; and a foreign exchange fee of 3%.
These charges are on top of the APR of 59.9% which is generously not raised to a higher level for cash advances but stays at the same rate as the purchase rate. Generally the cash advance APR is higher than the purchase APR so perhaps First Premier made an error here in being so altruistic in not charging more.
Each of these fees is legal and has been implemented since the credit card reform act was introduced in an effort to control usurious practices. Anyone foolish enough to sign up for such conditions almost deserves to be fleeced.
Some consumers willingly pay an annual charge on cards such as American Express to participate in the extra benefits which it brings and which they deem worth paying for. Other cards charge annual fees which are unwelcome and unnecessary especially when introduced on existing cards. A new trick fee of inactivity charges has been introduced by some banks but this practice has now been stamped out under the final credit card reforms and should be implemented soon.
The most common charges which each card automatically levies are late payment charges and over the limit fees. These are self explanatory though rates vary between card providers. Almost all cards carry a foreign currency transaction fee which is levied when the card is used abroad, and cash advance fees are charged across the board. Balance transfer fees are now standard at between 3%-4% and are no longer capped at $75.00 but more usually charged against the full balance transfer amount.
Credit card fees can be totally avoided unless a conscious decision is made to pay a fee for benefits. Some of the top air miles rewards cards have an annual fee but the associated benefits do make the fees a charge worth paying. The astute consumer never treats a credit card as a debit card and withdraws cash on it. Customers who pay their bills on time never pay late fees and using only 30% of available credit as recommended by Fico prevents any chance of over the limit fees.
Late payment fees have just been overhauled and changes will be implemented which will mean no that card providers may no longer charge a late payment which is higher than the minimum payment, and the majority of late payment fees will be capped at $25 instead of the current popular charge of $39.
However with the loss of profits which the bank will experience with the reduction in late payment charges it is only a matter of time before some begin to introduce the charges which are already levied by First Premier which sets a shining example of legal loan sharkery.