Credit cards are convenient, but watch out for fees.
Apple and at least one other vendor are looking to get rid of credit cards. Wave your iPhone over the reader and funds will be instantly deducted from your account to pay for your purchase. But let’s be sensible, there will also be fees just like credit cards.
Of course credit cards charge interest on any unpaid balance. And many charge an annual fee. But there are other costs, too.
Some issuers charge for a paper statement. Go green and get them online. Paying by phone? There may be a charge for that. Pay online instead at no cost. But go online a couple of weeks in advance and register the “funding account” you want to use.
Using a card to buy a cappuccino in Rome? It could cost you an additional 3% foreign transaction fee.
But things can really get ugly if you make a late payment or write an NSF check.
A late payment triggers a fee of up to $35 and, possibly, an increase in the interest rate. Then there’s a returned payment fee of up to $25 for an NSF check plus another fee of up to $35 from your bank. Pretty soon you’re looking at almost $100.
Exceed the credit limit on your card? The issuer may allow it, but you’ll have to pay a fee. Automatic payment? Make sure there are funds in your account. See above!
Credit cards are very convenient, but need constant management. And then the rules change or new fees are added.
Credit cards may appear to be an answer to staving off overwhelming debt. However, based on our over 30 years of experience helping people, it is a recipe for financial disaster.
Know someone who is losing the debt battle? Ask them to call us today for a FREE Consultation with an experienced attorney.
We will help them.
This column originally appeared in the Richmond Times Dispatch on 10-31-2014.
