Credit Card Bill: $3725.65. No Unfair Fees: Priceless.

Beat The Banks At Their Own Game
Credit: reallyboring

16 April 2011.

Beat The Banks At Their Own Game
Credit: reallyboring

16 April 2011.

Banks and credit card issuers have long been under the spotlight for mercilessly adding unfair fees and charges to your monthly credit card statements. The fees and charges seem small and don’t bother most people: $12 cash advance fees, $20 in merchant fees and $7.95 monthly subscription.

Buried in your already maxed-out total, last year’s holiday expenses and piling interest rate charges – all you’re really hoping to do is shave the debt down. The monthly credit card repayments only ever seem to take care of the interest charges and mounting fees.

Here’s news: unfair fees do add up. The credit card industry is competitive. Banks are fighting for your debt dollars and you do have enough consumer power when it comes to credit cards, to get a fair go.

Annual Fees

Consumer Action conducts an annual survey on credit cards and in 2009 found 80 percent of credit cards don’t charge annual fees. Among the cards that did, fees ranged between US$15 and US$150. Naturally, you will pay a premium for top tier rewards programs, privileges and benefits – but read the fine print.

Some credit cards increase their annual fees after an initial introductory period and free credit cards sometimes start charging high annual fees after the first year or two.

Balance Transfer Fees

Banks and credit card issuers tend to promote, from time to time, seemingly simple and seamless credit card balance transfers. These tend to include zero percent interest, annual fee waiver for the first one or two years and lower interest rates – and then hit you somewhere else.

Some balance transfer promotions do genuinely offer a better deal – but read the fine print before you move banks. Consumer Action found balance transfer fees are typically 3-5 percent (that’s $30-50 for every $1000) and charge pricey interest rates.  

International Transaction Fees: From Your Living Room

If you shop online and from international merchants, you may as well be using your credit card in Cairo. Twelve cards surveyed by Consumer Action admitted to charging fees of 1-3 percent of purchases made online from a foreign country, six other cards questioned refused to comment. Let’s not forget the (lousy) foreign exchange fees and commissions on top of that.

Your best bet: a US dollar PayPal account. If you shop online often, load it up once or twice a month. Plus it’s a safer way to shop online.

Merchant Fees

This has got to be the most ridiculous fee of the lot, but it’s usually the merchant’s fault. Some merchants will charge you (with and without telling you) their merchant fees: $1.50 – 3 percent of the transaction. Refuse and rebut merchant fees with your bank, with the merchant and simply refuse to pay (or buy).

Over Limit Fees

Why set a limit, let me go over it – and then charge me for it? With all the fancy technology, the bank can’t decline your card if you’re about to go over your credit limit? Most people just accept “it’s their responsibility” to keep track of their credit card balance and pay their over limit fees without a fuss. I say that’s what we pay the banks for – it’s their job and I’m not paying.

Unavoidable Fees

Late payment fees, cash advance fees and fluctuating interest rates. Pay on time, don’t use your credit card for cash and go for a fixed-interest rate card. For late payments, some banks do (secretly) offer grace periods of up to two weeks or one month. If you know you won’t be able to make your credit card payment on time, call your bank and make an arrangement beforehand.

However many good credit card issuers do offer rebates, so they’re not all bad. But don’t feel sorry for credit card companies, they still manage to earn their keep. Even if you do manage to escape their fees:

Via: CreditScore.net

Liz Zuliani

EconomyWatch