8 tips for avoiding credit card fees and surcharges that cost consumers more than $30 billion a year: Internet ScamBusters #229
Today we have an unusual issue for you. We occasionally focus ScamBusters on consumer issues, and today we shine a spotlight on one that has generated a lot of questions: credit card fees and surcharges. (Not the interest payments, but those extra fees that show up unexpectedly on your credit card bill, catching you unaware.)
Fortunately, most of these extra fees and surcharges can be avoided, or at least minimized. It just takes being aware that they exist and then managing your card use accordingly.
Following these tips can save you a bundle and help you make better decisions when using your credit card.
We also tell you about how much some identity thieves make when they sell the information about the identities that they've stolen -- we think you'll be shocked!
Time to get going...
How To Avoid Extra Credit Card Fees and Surcharges
Credit card fees and surcharges cost consumers more than $30 billion a year!
Many of us love credit cards - they make our lives so convenient. But we're paying a high price for this convenience. Credit card fees and surcharges are on the rise as credit card companies battle for your dollars.
We'll help you identify those extra, often hidden fees you're paying and show you easy ways to avoid them.
Credit card use is rising every year as credit card companies make ever more enticing offers to grab your business. Balance transfers at 0% interest, no annual fees, and even cash back! Seems great, right?
Think again. These offers come with extra credit card fees and surcharges that can put a big dent in your wallet - nationally, a whopping $30 billion dent!
The best way for you to avoid these extra credit card costs is to be aware of them and apply the simple solutions we offer here. Read on for eight of the most common credit card fees:
1. The Late Fee
The most obvious (and infuriating) credit card fee is the late fee. If your payment doesn't get to the credit card company on time, if it's even a single day late, you may have to pay a fee of $25 to $50.
This can hurt you in more than one way. Many people don't know this, but if you pay your balance late on one card, it can affect your interest rate on all your other cards!
According to an article on CBS Marketwatch.com, the Consumer Financial Education Center says that nearly 40% of credit card companies hike interest rates charged to cardholders who pay late on other accounts.
Solution: Pay with time to spare every month. If you get a late charge because of some delay outside your control (say, a mail snafu), call the company and explain what happened. Often they will eliminate the late charge.
2. The Over the Limit Fee
If you're near your credit limit, a single additional purchase - or even a late fee! -- could push you over your limit and into the range of the "over the limit" fee.
Solution: Keep your credit card balance safely below your limit. If you can, pay off your entire bill every month. This will eliminate virtually all of your fees.
Also, you should be aware of how much available credit you have before you incur a new charge. Checking your account online, or even calling your credit card company, is not sufficient because your balance may not be up to date. Your reported credit limit could be as much as two weeks behind your purchases (and so might not show the purchase you made last week).
Obviously, if you decide to buy something for more than you ACTUALLY have in available credit, you will go over your limit... and be fined for it.
Solution: Keep an up-to-date, accurate record of your credit card expenses. Don't rely on the Internet or telephone for your current balance.
3. The Monthly Service / Minimum Finance Fee
Do you really have a no-annual-fee credit card? Many credit cards -- even some 0% credit cards -- charge a monthly service fee or a minimum finance charge of $2 to $6. This adds up to an annual fee of $24 to $72!
Solution: A simple call to the credit card company will usually get you all the information you need. Be sure you understand the terms.
4. The Balance Transfer Fee
Some of the best things in life are free -- but the balance transfer fee may not be one of them. When you transfer a balance from one card to another, you may be charged a transfer fee. Some companies charge a flat rate, whereas others charge a percentage of the amount you've transferred.
Solution: Ask before you transfer! And don't transfer a balance unless you can do it without being charged a transfer fee. At the least, make sure that the benefit of the transfer is worth the fee that you'll pay.
5. The Cash Advance Fee
A cash advance may be just what you need, but cash advance fees can be hefty. If you get a cash advance from an ATM, not only are you responsible for the ATM fee, but you may also be charged 3% or more of the amount you borrowed.
Solution: Find out all the costs involved upfront. Don't go ahead with the cash advance unless you're prepared to accept the fees.
6. The Check Access Fees
Do you ever receive checks in the mail from your credit card company? Shred them! They are usually not free. You are generally charged a percentage of the amount of the check you write.
Solution: Resist using these checks unless you're prepared to cover the extra costs, or at least until you know what fees are involved.
7. The Currency Exchange Surcharge
Purchasing items overseas via the Internet is now fairly commonplace. Many people don't realize, however, that if you charge something from outside the US, your credit card company will add a 3% surcharge for the currency exchange.
Solution: See if the overseas vendor will accept payment in US dollars. If not, make sure the surcharge is no higher than 3% and that it's worth the extra surcharge.
8. The Merchant Surcharge
A merchant may add an extra fee onto your purchase if you use your credit card. This is legal in most states and it's meant to cover the expense that the merchant incurs by letting a customer pay by credit card.
Solution: Review your receipt before leaving the store or the Internet site, to ensure that you're not paying a surcharge for using your card.
It's All Up to YOU
The truth is this: you have to do your part to manage your credit card use.
Carefully review your credit card statements every month. Investigate all additional fees and have the confidence to contact your creditor. You have much of the power in this relationship.
It is more expensive for a vendor to replace you as a customer than it is to refund disputed fees and charges (assuming your complaints are valid).
Also, make sure you understand all of the fees. If you have any questions, call the credit card company and keep asking questions until you really understand the late fees, over the limit fees, monthly service fees, balance transfer fees, cash advance fees, and the like.
Few things are free when it comes to credit card use, but most extra credit card fees and surcharges can be avoided or minimized if you manage your budget and expenses carefully. Follow these suggestions and you can save money on credit card fees and make better decisions when using your credit card.
Your Identity May Be On Sale For As Little As $14!
Identity thieves are using the Internet to sell a whole package of stolen identity information -- credit-card number, date of birth, bank account data, and verification information -- for as little as $14.
A US-based credit card with a card verification number can be had for only $1-$6, according to a recent Symantec Internet Security Threat Report.
Scary, isn't it?
Security experts at Symantec report that criminal organizations are trading personal information, usually captured through hacking into personal computers, on so-called "underground economy servers" on the Internet.
According to Ollie Whitehouse, a security architect at Symantec, one of the most vulnerable sources for hacked data is Microsoft Office software.
That's because a malicious Word or Excel document from a hacker, when attached to a spam email, has a good chance of being opened since it appears legitimate and might be addressed to a specific person or company.
And companies don't want to restrict all access to Microsoft Word or Excel attachments because that would really hamper business productivity.
So be VERY careful: We recommend against opening email attachments from unknown parties.
That's all for today -- we'll see you next week.