Fees
Credit cards are very useful and most of us do rely on them at some stage. With so many available we tend to only look at the balance transfer and purchase rates but there are a lot of hidden charges that you need to be aware of.
Balance Transfer Fee – if you plan to start transferring balances to your new card check the fee first. If, for example, the transfer fee is 2.5% then work out how much this will cost you i.e. a transfer of £5000 will cost an additional £125.
Late Fees – credit cards must be repaid on a monthly basis even if it’s only the minimum amount. Many banks now charge a fee if this payment is late. Always check the date your payments are due, make sure you leave enough time for your payment to reach the credit card company and clear from your bank. Depending on your method of payment these times will vary, even payments made from online banking services may take several days to clear. Setting up a direct debit for the minimum card repayment amount each month is the safest way to avoid late fees and charges.
Important - many people are unaware of the clause that exists in some credit card companies term and conditions. If you miss just 1 payment on your card you may find that great 0% deal you just signed up for has been ended prematurely by the credit card company for breach of it's terms and conditions.
There can be many reasons for missing a payment, a simply mix up at your bank, a postal strike delayed your cheque or you genuinely forgot to make the payment, whatever the reason the credit card company will still turn off your 0% deal.
Over Limit Fees – your card will be sent to you with a specific credit limit. If, through balance transfers and purchases, you go over this limit then a fee may be imposed. You can also find promotional rates turned off for breaking this term and condition.
Not Using Your Card – can you believe that some banks will actually impose a fee if you don’t use your card? So the days of holding a couple of cards with no balances ‘just in case’ you may need them could be nearing an end. Check with the credit card provider before you apply, often this is called a service fee, account fee or dormant fee.