You might be shocked to know that, as a credit card consumer, you may have paid up to £25 in hidden charges! A huge number of credit card users’ end up paying hefty charges that are taken without their knowledge. It has become such a burning issue that the Treasury Select Committee has called on all credit card providers to offer clearer, more transparent deals to their customers.
Hidden Charges You Pay Until that happens, you ought to be aware of the mind-boggling amounts you could be paying in hidden charges.
Late payments – If you delay making your monthly payments until after the due date you may find yourself paying additional fees ranging from £15 to £25.
Exceed credit limit
– If you happen to clip past the valid credit limit offered by your credit card company, you should be prepared to pay anywhere between £15 and £25.
Statement copies
– Yes, even this is frequently chargeable; you may even be paying up to £5 per page of your statement.
Voucher copies
– If you lose your voucher and request a copy, then you may find yourself paying £5 for it. If you happen to be in another country or overseas, be prepared to pay even £10!
Unpaid direct debits
– This can cost you a hefty hidden charge of between £15 and £20 each time the direct debit is rejected due to insufficient funds.
To allay fears of hidden charges, credit card companies have begun to offer ‘summary boxes’. In these boxes you are supposed to get a bird’s eye view of the:
exact charges and fees
interest rates
repayment details
balance transfers
due debts etc
that are levied by the company. However, for the lay person many summary boxes are difficult to comprehend. This has increased fears that credit card companies offer lower initial rates simply to kill the competition and get customers and that once customers begin using their cards, they recover this money through the back door with their hidden charges.
The Hidden Charge of Credit Card Cheques Another substantial hidden charge most companies levy is in the form of credit card cheques. Most credit card consumers don’t even realize that companies begin by mailing unsolicited credit card cheques to them. They make tantalizing offers of how consumers can issue these cheques and then pay back the outstanding using their credit cards.
Consider these shocking statistics:
You might have to pay almost double interest on credit card cheques. For example, if your APR is 9.95%, then you may safely assume that the rate will jump to something in the range of 21% if you decide to use credit card cheques.
Such cheques will not normally offer an interest free period. So, from the moment you use the cheque, the interest clock starts ticking away furiously.
Add a 2% fee for cash handling charges
Credit card cheques, along with normal credit cards, levy hidden charges so be careful the next time you sign up for a credit card and always check your statement.
Are you getting harassing phone calls from bill collectors telling you that you'll be ruined financially if you let a credit card charge off happen? If you're constantly behind the eight-ball with your debt problems and are late with most debt payments, chances are you've heard the dreaded phrase "charge-off" from bill collectors. But, do you really know what a "charge-off" is? What will happen to you if you let a charge-off happen? And, what's the worst that can possibly happen to you, once a charge-off occurs?
What Is A Charge-Off? Basically, a charge-off is when a creditor (bank, credit card company or other lending institution) writes off the balance of the loan as a "bad debt." Banks and other lending institutions count your debt owed to them as an "asset" on their books. After about six months of non-payment, the lender can no longer call this debt an asset. Of course, you still owe the money and they'll still try to collect it from you, and they will give you a "ding" on your credit report - definitely not a great thing, but not the end of the world, either.
A charge-off is not a cancellation of the account by the creditor. Your ability to charge on the account will be revoked about two months before the charge-off. You still owe the debt.
How Serious Is A Charge-Off? Don't panic when confronted with the possibility of a charge-off - it isn't the end of the world! A charge-off is a serious situation, and can result in a big, bad mark on your credit report, and a lowered credit rating. You will still owe the debt, and bill collectors will do their best to collect. Always avoid the charge-off if at all possible, but don't commit payments to a high-pressure bill collector that you can't realistically make. Before you start paying down these bills, make sure you keep your household running by keeping current on food, utilities, insurance and medical expenses.
Professional bill collectors are notorious for applying huge amounts of pressure to force people to pay past due bills (that's how they make a living) that they really cannot afford. Sometimes these bill collectors want post-dated checks (checks written with a date in the future when, hopefully, there will be money in the account), and quite often these checks end up bouncing - compounding the problem.
Here are a few tips to help when a charge-off happens to you.
Keep In Touch Stay in touch with your lender and determine what the minimum amount is that you can pay now to avoid charge-off. Frankly, this is one of the biggest mistakes people in debt make - they don't talk to their creditors. Record the date of the call, and who you talked to. Get any agreements on paper - have the lender fax to you any new agreements. Don't be pressured - only make commitments that you can follow through with.
Negotiate, Negotiate, Negotiate Try to negotiate a lump-sum payment. Some lenders will be glad to get the debt off their books and may take 50% (or less) of the total debt. If you do make a deal this way, make sure you get it in writing and follow through! If you fail to make good on the deal, the lender will not be as forgiving in the future.
Even if your debt has been assigned to a bill collector, still try to work with the original lender - depending upon their relationship, you may still be able to cut a better deal with the lender. Once again, follow through is very important - if you make a promise, keep it!
Never Send A Post-Dated Check Never send a post-dated check. If you're sending post dated checks, then you probably don't have the money in the account today - you're just hoping you will have money in there later! This is a recipe for disaster, as many who receive post-dated checks will attempt to cash them immediately - either taking money you had planned for something else, or bouncing the check, as there was no money in the account.
Also, never, ever give a bank account number to a creditor or bill collector - under any circumstances. This can be a fatal mistake - even worse for you than the charge-off.
Get It In Writing This is one of the most common mistakes when dealing with bill collectors - the debtor (that's you) fails to get the new deal in writing. The verbal is worth the paper it's written on - in other words zero! With this type of arrangement, you will have no recourse at a later date. So, get everything in writing - always!
While a charge-off is definitely something you want to avoid, it surely isn't the end of the world. Remember to keep a cool head, don't make any commitments under pressure that you cannot keep, and get everything in writing.
Parting Thoughts Panic makes every situation worse, and that certainly applies to charge-offs.
Most lenders don't want to do a charge-off, so remember that they are likely to at least talk with you about possible solutions - meaning possibly a reduction in balances for a lump-sum payment.
Keep a dialog going with your creditors. Even if you can't come to an immediate agreement with the lender, always keep the door open for further discussions. Not talking can lead to a worse deal for you.
Honesty is always the best policy. Only make commitments that you can fulfill. Follow through fully on any deals you make. And, keep good records of all agreements and transactions.
Learn the lesson. Always live beneath your means - spend less than you make. Don't support a lifestyle that you can't afford with credit, and your life will be financially stress-free. And, a debt-free life is a great thing.
Both Matthew Lloyd & Dan Morton are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Matthew Lloyd has sinced written about articles on various topics from Credit Cards, Check Credit Rating and Mastercard Credit Card. Matthew Lloyd writes for About Your Money. His articles provide users with useful advice on a variety of financial products, including. Matthew Lloyd's top article generates over 74000 views. to your Favourites.
Dan Morton has sinced written about articles on various topics from Credit Cards, Broadband and Credit Cards. Are you trying - without much success - to become debt free? Why does it always feel like you're just treading water in a pool of debt? Feel helpless no more! Drop by