The next time you open your credit card statement, take a closer look at
the small insert titled “changes to your credit card agreement”.
You know the one I’m speaking about. It’s that small, folded paper
written in legalese that you promise to read some other time (but of course
that time never comes) or you just discard it with the other “junk”
inserts.
First and foremost you must understand that using your credit card after
you’ve received this notification results in your automatic
“agreement” to the new terms in the notice. To prevent these new
terms from affecting your account you must stop using that credit card
immediately or by the date given in the notification statement.
The most common modifications to credit card agreements include new APR’s
(annual percentage rates), new fees and/or changes to existing fees, or a
change to the grace period on your account. The grace period is the number
of days during which any credit used for purchases may be repaid in full
without incurring a finance charge.
Not knowing or not keeping track of the dollar amount limit on your card
is another trap you should avoid. Credit card issuers will allow you to charge
a small amount over the limit set on your account. However, don’t be
surprised when you get hit with an “over limit fee”, usually around
$35.00 or higher, on your next statement. Also, be prepared for your APR
to be increased if you go over your credit limit.
You’ll also trigger an increase to your interest rate if you miss your
payment due date. Some companies consider your payment late if not received
by noon or 1 p.m. on the date due. Along with the higher rate, you’ll
also pay a “late fee” of $29 on up. Be sure to use the company’s
preprinted envelope when sending your payment. These envelopes allow the
pre-printed bar code to be scanned by the post office so that it can be delivered
more efficiently.
If you’ve counted on those few extra days from the time you mail your
check and the time the check clears your bank, beware! Many credit card issuers
have switched from the traditional method of processing checks to a new
electronic process. This new system shaves off a day or more from the traditional
method it normally takes for your check to clear by electronically debiting
your account.
If you’re considering paying your credit card bills online, check to
see if any additional fees will be charged for using this type of payment.
I recently received an e-mail message from one of my credit card companies
announcing how easy it would be to make my payments online. Included in fine
print at the bottom of the e-mail was this note - “A fee of up to $14.95
may be charged for this service and will be deducted from your checking
account”. Hmmm, spend 37 cents on postage and mail my payment five days
before the due date or pay now and get charged an additional $14.95 fee?
I’ll bet you can guess which choice I made.
Taking the time to carefully read and understand your credit card agreement
now will help you save money by avoiding unnecessary fees or climbing interest
rates later down the road.
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