How To Avoid Unreasonable Penalties
Author: Debbie Dragon

There are many reasons to avoid carrying a large balance on
your credit cards. Large balances can negatively impact your
credit score. They will cause you to use your hard earned cash
to pay interest. Now there's one more reason to avoid carrying a
large balance: if you make a late payment, your penalty might be
tied to how much you owe the card company.

It's true; card companies make their money through fees,
penalties, and interest. But some of the penalties are severe,
such as what seems to be the new standard: a $39 late fee on
balances of $1,000 or more. And that penalty can come from being
just two days late on a payment.

If you think this seems a bit harsh, you're right. Fees and
penalties have never been stricter. The mortgage crisis is to
blame; with so many bad debts being written off by home buyers
filing bankruptcy, card companies are facing record losses. They
are trying to recoup these losses however they can, and fees and
penalties are the fastest way.

Take a look at recent statistics for three of the top card
issuers in the United States:

Discover

Late fee: $15 on balances up to $100; $25 on balances of $100
up to $1,000; $35 on balances of $1,000 and greater.
Over-the-limit fee: Same as late fee.

Citibank

Late fee: $15 on balances up to $100; $25 on balances of $100
to $1,000; $35 on balances of $1,000 and more.
Over-the-limit fee: $35

Bank of America

Late fee:$19 for balances less than $100; $29 for balances $100
to $1,000; $39 for balances greater than $1,000.
Over-the-limit fee: $35

Bank of America's American Express card also charges 25%
interest on cash advances. If you use your card for that
purpose, then carry a large revolving balance on the card, you
will find that most of your monthly payment is being eaten by
fees, penalties, and interest, with very little paying down the
actual balance on the card. This can be frustrating and
detrimental to card holders who are trying to get out of debt.

What should you do to protect yourself from high fees and
penalties? Do your research. Sign up for cards that offer
reasonable terms. You can comparison shop for credit cards right
here on Creditor Web. If you have a large balance on one card
that you could pay off within six to twelve months if only the
interest were lower, consider applying for a 0% interest balance
transfer card. That way you can put all of your money toward the
principle balance for the first six months to a year. (Be aware
that 0% interest cards do begin to accrue interest after the
introductory period. Terms vary by card.)

Talk to friends and family members who are satisfied with their
credit card services. Keep up with headlines that talk about
good and bad choices in cards. Learn how to negotiate with card
companies for better terms. Once you're armed with knowledge,
you will be able to make an intelligent decision about which
card is right for you – and keep unreasonable fees and penalties
at bay.


About The Author: This article has been provided courtesy of
Creditor Web, http://www.creditorweb.com .