What lenders rather you not know: credit card charges to beware
Pamela Lucas
In April 2006, banks and credit card companies lost a case brought against them by the OFT for the overly high penalties they had been charging their customers. As a result, these companies have had to lower their charges (sometimes as much as 20 for a missed or late payment) to 12. However, now the banks are re-couping the money they have lost, by adding heightened interest rates onto default charges, which can raise the 12 fine to approximately 14.
Credit card charges to watch for are: late payments, exceeded credit limits and returned payments. However, banks and credit card companies won't immediately alert you to these charges, but will include them in the ?new transaction? part of your statement, meaning it is your responsibility to read your statement very carefully so you can act quickly if need be and avoid an increase in the penalty charge or interest charged on that penalty.
Some companies are less strict than others about charging for misdemeanours. For example, if your payment takes a day or two to reach them (say there is a national holiday or a weekend which delays your funds being cleared from your bank account), they might let the charges go if you contact them soon enough.
Other credit card charges to watch for are charges for duplicate statements or correspondence which you may have mislaid or discarded. Banks and credit card issuers are permitted to charge you a small sum for duplications, but not much; Consumer groups or institutions like the Citizen's Advice Bureau will be able to provide you with information as to what would be a reasonable charge. You can also ask your bank or credit card company to send you a list of all their charges. Legally, they have to send this to you within 40 days. Finally, if you have been fined before, it is sensible to check how much interest you paid on the fine. It may be the case that you were paying an overly high rate of interest at the time, which you are entitled to contest.
A new way that the credit card companies are enticing customers to take out a contract with them, is by offering a 0% deal on balance transfers, which sounds fantastic, but you may unaware that they will charge a fee for the privilege, which may not be immediately obvious. Credit card companies will offer up to 13 months of no interest charges on balance transfers, but will counter that great deal with only three months of 0% charges on any new purchases, which means that if you transfer your balance and spend with your new card, the high rates of interest charged on purchases, after the first three months, will cancel out any interest savings you may have made on the initial balance transfer. Consider keeping two separate cards in this case - one for balance transfers only and one for new purchases.
Lastly, there is the ?low-usage fee?, which is now a common feature of credit card contracts. Previously, banks charged for specialised accounts, which offered the customer privileges, such as free travel insurance or air miles. This would seem like a fair deal to the customer. Now, however, banks are starting to charge customers for insufficient, or lack of use of their credit cards. We would reiterate here that is extremely important to check the small print of any contract for such charges and wind up any dormant credit card accounts you may have.
Pamela Lucas, a freelance writer keen to help people make informed credit decisions - suggests it is paramount that before you apply for, or renew your credit card you read carefully the http://www.mbna.co.uk/creditcards/directory.html credit card charges in the small print.
|
