5 Signs a Charge Card Company is Ripping You Off

Your charge card company is actually one of your lenders, or entities providing you with financing. People neglect to think of credit cards as loans, but they are actually some of the most expensive loans many borrowers take. It is critical to get the best deals possible on your charge card in order to avoid overpaying on each purchase. 

#1 Rate Increases without Reason

Your charge card company can raise your rate if you have a variable rate credit line like most borrowers do. They need to provide you with written notice when this occurs. As of 2009, interest rates on the existing debt you have with a charge card cannot be increased. However, even changing interest rates on new debt without providing reasons why is a sign of a bad company. When your rate goes up, you should know the reason. A credit score drop, a weak economy or a rise in the national prime rate are possible reasons.

#2 High Maintenance Fees

You will have a monthly payment for your charge card. This is generally just an interest payment for the charges you made in a given month. However, some charge card companies will assess an additional monthly maintenance fee on top of your standard payment. This fee is not truly necessary, and it can be a sign your lender is simply assessing fees because they can. Instead of paying these fees, seek another lender who does not charge them.

#3 Extra Charges on Transactions

Some charge card companies charge premiums on certain types of transactions. The most common example of this is Internet payments. Internet payment processing is seen as risky by most charge card companies, and there is a higher degree of default on these payments than on in-person payments. As such, your company may try to assess a fee of a few cents to a few dollars on Internet transactions. You should pay attention to these fees because they do add up. These fees are also unnecessary.

#4 Late Payment Fees

If you miss a bill payment by less than 30 days, the fee assessed for the late payment should be relatively small. Once you go over 30 days, 60 days and 90 days, the fees will increase at each level. That being said, the late payment fees should never be higher than the missed bill itself. You should be able to make these payments without going into debt with another lender. If your fees are too high, then you may be getting ripped off by your charge card company.

#5 Frequent Compounding

Most credit cards compound once monthly. This means interest is assessed on the amount on your card every 30 days. Interest rates on credit cards end up being very high because the compounding means you are assessed interest on your interest. While this is expected and even manageable for an interest rate that compounds monthly, it is astronomical for an interest rate that compounds semi-monthly or weekly. You should review the terms of your loan contract to assure your interest rate is only compounding once each month.

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