Credit Card Penalties: the Best Way to Avoid Them

By: Wendy Drews

When applying for a credit card deal we are always looking for the one that has the lowest APR and fees. We always check how much we will be charged for a cash advance or a balance transfer. But what we forget to think about is what might happen in case we miss a payment.
Although hidden fees are prohibited by law credit card companies try to make their fees and penalties less obvious. The most common practice is to write them in small print of the back of the credit card statement.
Every year cardholders pay billions of dollars in late fees. If you want to avoid those penalties follow a few simple rules.
Making credit card payments is your responsibility. No matter how small the print is you will be always to blame for not reading it. So rule number one is to read everything there is on your credit card statement. Make sure you know how much the fee will be and whether or not your bank can raise your interest rate.
Rule number two.

Make sure that you know how long your billing period is. If you think that it is 31 days for any credit card you are wrong - some banks have shorten it up to 20 days! This part is especially tricky if you have been using the same credit card for years. You get used to a long billing cycle and end up missing the due date if the bank changes the terms.
The third rule requires some effort. You need to make at least your minimum payment at the end of each billing period. Some issuers might forgive one or two missed payments (you need to check terms and conditions). But as a rule you will get penalized right away.
The fourth rule is the most important one: never put off making your payment. First of all, you can simply forget to do that. What's worse, your bank can have a wonderful habit of registering receipts up to 5 days after their arrival! Many banks require the checks to arrive no later than 12 p.m. on the day it is due, otherwise it will be considered to be a late payment.
The best way to avoid problems with late payment fees is to write your check as soon as you get your bill. Make it a habit to mail it the next day and you will never have to pay any extra fees. Or you can pay off your balance online. Most banks will be glad to receive your payment through their website.
Another excellent way to avoid late fees is to use automatic payments. That means the money will be withdrawn automatically from your checking account on the due date. Just ask your bank for the service.
So whenever you apply for one of the numerous credit card deals make sure you have read the terms and conditions and understood what will happen if you do not make your payments on time.

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