Avoiding 'Extra' Credit Card Debt
Your Credit Card May Be Costing You More Than You Think
Jul 19, 2007
There are many hidden fees that credit card companies charge today that increase one's credit card debt substantially. Do you keep tabs on your credit cards on a monthly basis to see if you are spending hundreds of extra dollars every year you don't need to? Most consumers don't; they just pay the bill when it shows up - which is great, but not enough to reduce that credit card debt.
Let’s take a look at some of the most common credit card debt increasers, and how you can avoid them altogether.
Credit Card Debt Increaser #1: Grace Periods
It used to be that credit card owners could rely on a "grace period" from the companies that issued their credit card, where a period of (usually) thirty days passed where no interest was charged after a purchase was made. If you were one of the lucky credit card holders who were able to pay off the debt before this "grace period" expired, the whole situation ended up being more like an interest-free loan than credit card debt.
However in recent years, several credit card companies have chosen to reduce or eliminate completely these "grace periods". You may have had a grace period at one point in time but didn't realize it was dropped. Go and take a peek at the fine print on your last credit card statement. Is there any mention of a "grace period"? If its been reduced or eliminated altogether, it's time to seriously look at more user-friendly credit card companies that allow you thirty days leeway to pay off your credit card debt.
Credit Card Debt Increaser #2: Late Fees
Have you recently looked at how much your late fees are for not paying off your monthly amount due on time? Many consumers are shocked when they realize their late fees are more than double what they were when they signed up initially for their credit card. Added to the removal of the "grace period", late fees can create a serious increase in your credit card debt.
To reduce your late fees, write a note to yourself on your calendar a full three days before your credit card payment is due. Better yet, pay the amount as soon as you receive the statement. Because the longer you wait to reduce that credit card debt, the more interest you'll pay. Which brings us to the last of the credit card debt increasers.
Credit Card Debt Increaser #3: Interest Rate Hikes
One late payment is oftentimes all that a credit card company needs to hike up your interest rate. It's no picnic when you're late behind the scenes: not only will the credit card company send off your infrigement to the credit bureau, but they'll make it more of a challenge for you to pay off the credit card debt to boot. And the bad news doesn't stop there: all it takes is one lender to report to the credit bureau that you've missed a payment and your remaining lenders have the right to follow suit with their own interest rake hikes.
There is only way to avoid this horrible scenario: pay your credit card debt on time.
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