Most people do not give much thought to how much the use of credit cards really costs. While you may think you are aware of the costs of credit, there are many hidden fees and charges that often go unnoticed by consumers until it is too late. If you do not keep a very close watch on your credit card fees, you could end up paying hundreds of dollars per years without evern realizing it. If you are trying to stay within a budget, hidden credit card fees can be a real drain on your finances.

Here are some of the most common types of credit card fees and what you can do to avoid them:

Your grace period may seem to be a period of time in which you can pay your bill past the due date without accruing additional interest of fees. While this may have been true in the past, credit card companies are making it more difficult to pay your bill late without any extra charges. In previos years, if you charged the maximum on your credit card but were able to pay your balance in full before the end of the grace period, it was like a loan extension that cost you no additional money. The majority of credit card comanies have reduced the grace period to less than 25 days and some have eliminated grace periods all together. A purchase you make at noon today will usually begin accruing interest immediately. Check the fine print on your contract with the credit card company. If you find that you have no grace period before interest starts to build, consider switching to a more user-friendly card.

Late fees can really add up. Make certain you know what the late fees are for your credit card and under what circumstances you can be charged. Late fees have increased dramatically over the past several years. This fact combined with a reduction in your grace period means a hefty profit for credit card companies. Whenever possible, send your payment the very day you recieve your credit card statement. There are several reasons to never make a late payment on your credit cards. The most obvious reason is that you will avoid any late fees. Next, a late payment can be reported to the major credit bureaus, leaving a bad mark on your credit report. There is also the possibility that by making one late payment, your interest rate can be raised permanently.

You may not be aware that even with a single late payment, your credit card company can, and most likely will, increase your interest rate. One late payment gives your credit card company the right to raise your interest rate to the maximum allowed by law. This does not just apply to your credit cards. Any late payments reported on your credit report can give all your lenders the right to raise your interest rates. A late payment means higher risk to a lender and you may find that several of your interest rates go up due to a pate payment listed on your credit report.

Keeping your interest rates low and avoiding hidden charges and fees is the best way to save money over the long-term when it comes to your credit cards. Managing your credit is one of the most important factors in your overall finaincial stability. Make sure you understand completely the terms and conditions of your credit cards and all other credit accounts you may have such as your car loan, mortgage, and any other revolving accounts. By making your payments on time, you will save hundreds or more dollars each year in interst and other fees.

Published - November 2005