Of all the necessary evils that threaten our financial well-being, credit-card issues easily take the top of the list. Not only do you have to worry about other people fraudulently using your credit details, you further have to be on guard against your own credit card company slicing off neat penalties that you weren’t clearly informed existed.
Despite the ease and comfort with which we can choose different payment options through our credit providers, which lighten the load of household responsibilities, the real question lies with our final bank balance at the end of the month. One of the best ways to make sure that this keeps going up, or gets used properly, is to make sure that unnecessary costs aren’t deducted from your account.
So here are 5 questions you shouldn’t be afraid to ask your card issuer, and demand the answers for.
1. If I am late on a payment, what ‘late fee’ will I be forced to pay?
The Government Accountability Office (GAO), Congresses research agency, found after an extensive survey of America’s six largest card issuers, that most credit card users don’t know that if they’re late on even one payment, they will be charged on average $35 as a ‘late fee.’ To read it yourself, see: www.gao.gov/new.items/d06929.pdf
2. How much will my interest rate go up if I make a late payment? Will this apply to past and future charges? Please explain.
The study also found that interest rates can go up by a whopping 30% if you pass the required payment date. This interest rise is usually applied to past and future charges as well, so you’re getting penalized for payments that you’ve already made on time.
3. If my debt is $300, and I pay $250 of it on time, will you charge me interest on the outstanding $50, or the whole $300?
To our complete lack of surprise, half the credit card companies will take home interest on whole sum. Of course, it goes without saying that you must know your interest rate. Usually, it’s varies between 8-19% depending on the type of payment you make.
4. Is there a charge for exceeding my credit limit? How much is it?
Credit companies will not hesitate to penalize you for what they view as “risky behavior.” This includes overstepping your credit limit, the average charge for which is usually over $35.
5. (If you don’t know what a certain charge is or where it came from) Please explain this charge to me. Who charged it to my credit card and what is it for.
Even though it sounds self-evident, you should never be embarrassed in the least to request information on particular charges to your credit card. It’s your money, so don’t be afraid to act like it. In addition, receiving precise details on credit costs will enable you to spot fraud and identity theft before they wreak havoc on your life.
The GAO didn’t mince words when labeling the information card issuers provided as “having serious weaknesses that likely reduced consumers’ ability to understand the costs of using credit cards.”
Nonetheless, if you show them that you mean business, you will quickly receive the answers that you need.