Authored by Jackie Acosta in Credit Card
Published on 11-21-2008
Credit cards are inventions of convenience which came out of an idea to make money management easier and hassle free. While it has lived up to its true purpose, every one carrying a credit card should be reminded that, as the popular saying goes, “with great power comes great responsibility.” Credit cards have their drawbacks if one is not careful, and this is not only in the case of racking up debt by charging too much, but in being vigilant with hidden charges the card may come with it.
Hidden charges are little things that go unnoticed (hence, hidden), and they can pile up and cost a lot of money if one is not vigilant. Check credit card statements if there are additional fees such as insurance policy on the credit limit, annual fees, statement fees, and taxes. Even if they are small amounts at a per statement basis, they can cause much financial damage if added up together. For example, if the credit card charges about $2.50 per $1000 for insurance credit, and if the balance reaches an average of $5000 per month for year, additional charges total to about $150 a year—an amount that can be placed to pay off debt instead.
At the very moment a person signs up for a credit card, he or she has to be careful of the fine print and read carefully what conditions come with it. Some companies charge for additional services like more frequent statement requests or additional statement copies aside from the annual fees so be careful of these too. Penalty charges for late payments, exceeding credit limit and non-payment of direct debits, and even usage of the card outside country of issue may also vary from card to card, so make sure to get the best deal, or better yet, try to avoid them altogether.
If these fees show up in the credit card statement, don’t be afraid to talk to the credit card company about it, especially if these were unforeseen or if it sounds unfair to the holder. Credit companies can usually reverse these charges if the holder can justify why it needs to be waived. Some charged services can be opt out of—make sure to do this from the very beginning to avoid paying for things that are not really necessary.
The bottom line is, always be vigilant with credit card charges, and always read the fine print before committing to one. Most credit card companies offer come-ons to potential customers by through catchy promotion deals and other marketing gimmicks. An example of this is claiming to waive annual fees, but the fine print reads that this is only for the first year, and for the succeeding years, the holder will be charged. Or that the holder will be promised a high credit limit but will be charged an unfairly high insurance coverage for it. Make sure to check what options are available for the long run and not just for the first few months after the sign up. A credit card should be a convenient money management tool, not something that would cause more trouble.