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.