There is something in common among all credit cards – fees and penalties. Some fees are charged only in specific conditions. It is extremely important to review all fees charged on your bill. Card holders might pay heavily for mistakes they make and that will reflect on the financial charges as long as the card is being used.
Most credit card issuers have started charging application fees, since the newly reformed credit card laws has been passed, enabling them to regain lost revenues. The new laws however, has tried to cap this application fee, these fee are for the opening of the credit card accounts and also for the card itself being delivered. Application fees however cannot exceed 25 dollars.
Duplicate statement fees
Every customer is entitled to the extensive monthly statement with the introduction of the new laws. In fact, the credit card customers are offered a grace period of 21 – 25 days to pay the bill amount. However, if a customer requires a duplicate statement, he or she will be charged for the additional statement either being a hard, or a soft copy.
This is another fee that is charged on credit cards .These fees may be as low as 30 dollars or as high as 300 dollars. The annual fee is higher for those credit cards which offer lot of rewards. Some credit cards are called free because the annual fee(08-4) is waived on the credit cards. However, customers must keep in mind, that even if the annual fee is waived, it is normally for the first year. Subsequent years will definitely come with the added cost of the annual fees.
Balance transfer fees
Balance transfers are usually an incentive offered to customers to woo them away from the cards they use. This is another fee which may or may not be charged on the credit card holder. If customers have a high outstanding balance and are worried about exponential interests accumulating on top of that, they can go for balance transfer to another credit card which gives them an introductory period with low or 0% APR. However, some companies may charge the customer a transfer fee, which could vary between 3 – 5% of the balance amount. Often, this fee could upset the cardholder’s calculation as it eats into the savings.
Currency conversion fees
Credit cards often prove to be very helpful for those customers who are on a vacation and do not want to be burdened by carrying cash or foreign exchange. When these customers use their credit card in another country, they are also charged a conversion fee of approximately 2.5%. Some credit cards do not charge these conversion fees.
Interestingly, this currency conversion consists of 2 parts. Visa and MasterCard, the payment processing networks, charges a fee of 1%. Additional charges are also from the lending banks. Sometimes there isn’t enough transparency and customers are not aware of these be charges until the bill arrives. Apart from banks that charge only the part that Visa or MasterCard take, there are other institutions that do not charge anything and pay for the 1% of the provider fee as well. These fees are explained elaborately in the cards contract, and customers should carefully read through thoroughly before taking any chances with the credit card.
Returned Check Fee
The credit card issuer charges a returned check fee when the cardholders check bounces at the bank because there are insufficient funds. Therefore, the credit card customer should ensure that there are enough funds before issuing a payment. Banks charges an additional fee for having returned a check because of insufficient funds.
Late fees are charged when due date in paying a bill is missed. Late fee was quite high until recent credit card reforms. New laws have capped the late fees to maximum of 25 dollars. When the outstanding balance is due, even after the bill payment deadline is over, the late fee gets added to the outstanding balance. For those customers, where the outstanding debt is on a monthly revolving basis, there is an interest charged also late fees.
An over-limit fee is one of the more controversial fees, which is charged by credit card companies. Every credit card has a credit limit that is based on the creditworthiness, of the applicant. A customer with a long and good credit history gets a higher credit limit while customers with low credit score will a much lower limit and possible a much higher APR. With a customer exceeding their given credit limit, the issuing companies may not necessarily block the customers for future use. However, they will charge an over limit or over draft fee. Customers need to be careful and ensure that their outstanding balances do not exceed their credit limit. The other disadvantage of maximizing ones available credit is the automatic depletion of a high credit score.
Cash Advance Fees
Credit cards can be used to withdraw money from ATMs. However, not all credit card companies allow this benefit free of cost. There is a cash advance fee whenever the cardholder uses this option.
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