Most Americans have at least one credit card, if not more, that they use on a regular basis. These credit cards can be useful when paying for monthly expenditures, so long as the balances are kept to a minimum and paid in full. Additionally, most credit cards come with fees that make it nearly impossible to pay the card down if the balance becomes too high. According to a 2019 Consumer Reports study, one-third of American credit card consumers say that they struggle with the fees that came along with their credit cards. It is important that consumers be aware of these fees and take steps necessary to avoid them if possible.
Read the Fine Print
One of the best ways to determine what fees come with a credit card is to carefully review the fine print that comes with the consumer’s credit card contract. If any fees will be charged to the card, this information will be found in that fine print.
Pay the Bill on Time
Many times, fees do not kick in until the cardholder misses a monthly payment. Not only will the card’s interest rate skyrocket after missing a payment, but the person will be hit with late fees due to this missed payment. To keep these fees from incurring, the best thing is to ensure that all bills are paid on time. One way to do this is to enroll the account through autopay to make sure these payments are paid on time. The payments will come automatically out of the person’s bank account on that date every month.
Contact the Card Provider
If a payment is missed or if the person anticipates the payment being late, it does not hurt to first contact the card provider to see what can be done to avoid the late fee. If this is the customer’s first time missing a payment, the credit card company may be willing to waive the late fee.
Interest Rates
All credit cards come with an interest rate that is charged against the balance owed every month. Depending on the type of credit card, these interest rates can be quite high. If a cardholder is lucky enough to get a lower interest rate, the best way to keep it is to pay the bill on time every month. If the cardholder wants to avoid having to pay any interest, it helps to pay the balance in full every month. However, this fee is one that is unavoidable if the person is not able to pay what is owed in full every month.
Balance Transfer Fee
Many times, cardholders look to get a lower interest rate or a promotional rate of zero percent for a set period of time by doing a balance transfer. Even though the new card may have a zero percent interest rate, a fee is imposed to transfer the balance to that card. This fee could be a flat fee, or it could be a percentage of the balance, depending on how high it is.
Annual Credit Card Fees
Credit cards also come with a one-time annual charge that is imposed for simply owning a credit card. If the card is an exclusive one that comes with a lot of perks, this annual fee can be quite high. It is important to investigate what annual fees are involved before signing a credit card contract to have the card issued. Some card companies will waive the annual fee for at least one year, but not all will agree to waive the annual credit card fee.
Cash Advance Fees
Many credit card customers utilize the cash advance feature that comes along with their cards. Cash advances allow the cardholder to use their card to withdraw money from an ATM or bank, which usually comes with at least a five percent fee on the advance. Unlike monthly interest fees, cash advance fees are immediate, regardless of whether the cardholder pays back what is withdrawn in full before the month lapses.
As bankruptcy attorneys, we see credit card debt as one of the most common problems facing those with serious financial challenges. It is not surprising with the high interest rates, unreasonable fees, harassing debt collection calls, penalties and never-ending minimum payments that do not even make a dent in your actual debt. We offer additional tips for eliminating credit card debt on our blog.
Filing for bankruptcy is also a viable option for those struggling with insurmountable credit card debt. Chapter 7 is the fastest form of consumer bankruptcy and forgives most unsecured debts like credit card debt, medical bills, and personal loans. There are certain qualifications a consumer must meet in regards to income, assets and expenses to file for Chapter 7 bankruptcy, which is determined by the bankruptcy means test.
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If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.