Tips on Credit Card Fees and Universal Default Charges
Author: Board Monitor
Posted: Mon Oct 18, 2004 5:09 pm
Post subject: Great Credit Card Fees/Universal Default Article
Great article about credit card fees and the universal default clause that appeared in the Sunday Akron (OH) Beacon Journal. I am proud to say that CardRatings.com is mentioned in the article!
Posted on Sun, Oct. 17, 2004
Pay late, pay fee on credit card
More issuers have fees -- up to $39 a month. More rely on fee income
By Betty Lin-Fisher,Beacon Journal business writer
If you're often pushing the deadline on your monthly credit card payment, be careful. Credit card issuers have some hefty fines -- as high as $39 -- for late payers.
The rules are getting tougher, too. Some credit card issuers have a specific time on your due date by which your check must be processed, or you'll be considered late. In many cases, that's a 1 p.m. deadline.
That means you're often at the mercy of the workers at the credit card company and the postal service, if you're mailing your check. Perhaps your check is actually at the company's processing center, but if it's not put into the system by the deadline, you'll get hit with the fee.
``It's crucial to know, particularly if you've had a history of late payments, that the fees for late payments are pretty dang steep these days as more credit card issuers are relying more on fee income,'' said Curtis Arnold, founder of cardratings.com, a Web site that has a searchable database and analyzes credit card offers.
If you normally pay on time and you have a one-time close call, as I did recently, the credit card issuer usually will give you one break. A few months ago, my due date was nearing and the check I had sent hadn't been posted, so I called and told the company it should be arriving any day. They assured me that if I did get charged a late fee, they'd waive it since I had a good payment record. It ended up getting there in time.
But don't count on them doing that more than once, Arnold said.
Federal law requires that companies must credit all payments to your account on the date they're received. However, creditors are permitted to set some reasonable rules for making payments, including a time deadline.
Linda Sherry, spokeswoman for Consumer Action, a consumer education group in San Francisco, said the language in the federal law ``is a loophole that you can drive a truck through.''
Sherry, who conducts a yearly survey of credit card offers and late fees and is now in Washington, D.C., found that 26 out of the 45 issuers she surveyed had a cut-off time for late payments, with associated late fees as high as $39.
That's more reason to make sure you give yourself adequate time to mail your check. Some consumer advocates even suggest mailing a check for what you owe as soon as you get your bill in the mail. But I know there are lots of consumers who don't want the creditor to get their money any sooner than the due date, so they wait a little bit. Just make sure you give yourself at least five to 10 days for that check to make it in.
Or, if you do mail that check ahead of time, be aware of the new Check 21 law, which goes into effect Oct. 28. With Check 21, which was meant to update the processing of checks, the ``float'' that a lot of consumers rely on is gone because it allows checks to be processed much quicker. So, for instance, you may no longer be able to write a check on a Wednesday, expecting to have until Friday for the check to clear.
Better yet, pay your bill online, Arnold and Sherry said. Then you'll know exactly when the bill will get paid. But you still have to do some planning ahead with online bill pay, which sometimes takes three days to post the payment.
Find out whether your bank or your credit card company charges for the online bill pay.
If you're really pushing deadline, most credit card issuers will let you call and pay that day with another credit card or your checking account number. But make sure you find out how much they're charging you for that convenience, since it can be costly, Sherry said. In some cases, it could be as high as $15.
To find out about the fees and deadlines associated with your particular credit card, check your credit card agreement, look at the fine print on your bill or call your issuers to find out more details.
Universal default
There's another, bigger thing to worry about if you're late on your credit card payment. About 40 percent of card issuers have a clause called ``universal default'' in their credit card agreements, Arnold said.
This means they have the right to increase the interest rate you pay if they see on your credit report that you've been late on a payment to another creditor.
Let's say you've had a credit card with Company A for 10 years and you've never been late on a payment. But let's say you were late on a payment to Company B for one reason or another -- either you were just late in making the payment or you were contesting the bill. It doesn't matter. If Company A has a universal default clause, the issuer has the right to hike your current interest rate, which may be 8 percent, to 20 percent or higher.
``It's so unfair to consumers,'' Sherry said.
Arnold said it's all the more reason to make sure you're always paying on time or to find cards without these universal default clauses in them. Again, check with your card issuer to find out if your card has this clause.
For the rest of the article, please click here:
http://www.ohio.com/mld/beaconjournal/business/9935542.htm
_________________
Regards,
Curtis Arnold
Board Monitor
http://www.CardRatings.com
20K+ Credit Card Reviews
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Posted: Mon Oct 18, 2004 5:09 pm
Post subject: Great Credit Card Fees/Universal Default Article
Great article about credit card fees and the universal default clause that appeared in the Sunday Akron (OH) Beacon Journal. I am proud to say that CardRatings.com is mentioned in the article!
Posted on Sun, Oct. 17, 2004
Pay late, pay fee on credit card
More issuers have fees -- up to $39 a month. More rely on fee income
By Betty Lin-Fisher,Beacon Journal business writer
If you're often pushing the deadline on your monthly credit card payment, be careful. Credit card issuers have some hefty fines -- as high as $39 -- for late payers.
The rules are getting tougher, too. Some credit card issuers have a specific time on your due date by which your check must be processed, or you'll be considered late. In many cases, that's a 1 p.m. deadline.
That means you're often at the mercy of the workers at the credit card company and the postal service, if you're mailing your check. Perhaps your check is actually at the company's processing center, but if it's not put into the system by the deadline, you'll get hit with the fee.
``It's crucial to know, particularly if you've had a history of late payments, that the fees for late payments are pretty dang steep these days as more credit card issuers are relying more on fee income,'' said Curtis Arnold, founder of cardratings.com, a Web site that has a searchable database and analyzes credit card offers.
If you normally pay on time and you have a one-time close call, as I did recently, the credit card issuer usually will give you one break. A few months ago, my due date was nearing and the check I had sent hadn't been posted, so I called and told the company it should be arriving any day. They assured me that if I did get charged a late fee, they'd waive it since I had a good payment record. It ended up getting there in time.
But don't count on them doing that more than once, Arnold said.
Federal law requires that companies must credit all payments to your account on the date they're received. However, creditors are permitted to set some reasonable rules for making payments, including a time deadline.
Linda Sherry, spokeswoman for Consumer Action, a consumer education group in San Francisco, said the language in the federal law ``is a loophole that you can drive a truck through.''
Sherry, who conducts a yearly survey of credit card offers and late fees and is now in Washington, D.C., found that 26 out of the 45 issuers she surveyed had a cut-off time for late payments, with associated late fees as high as $39.
That's more reason to make sure you give yourself adequate time to mail your check. Some consumer advocates even suggest mailing a check for what you owe as soon as you get your bill in the mail. But I know there are lots of consumers who don't want the creditor to get their money any sooner than the due date, so they wait a little bit. Just make sure you give yourself at least five to 10 days for that check to make it in.
Or, if you do mail that check ahead of time, be aware of the new Check 21 law, which goes into effect Oct. 28. With Check 21, which was meant to update the processing of checks, the ``float'' that a lot of consumers rely on is gone because it allows checks to be processed much quicker. So, for instance, you may no longer be able to write a check on a Wednesday, expecting to have until Friday for the check to clear.
Better yet, pay your bill online, Arnold and Sherry said. Then you'll know exactly when the bill will get paid. But you still have to do some planning ahead with online bill pay, which sometimes takes three days to post the payment.
Find out whether your bank or your credit card company charges for the online bill pay.
If you're really pushing deadline, most credit card issuers will let you call and pay that day with another credit card or your checking account number. But make sure you find out how much they're charging you for that convenience, since it can be costly, Sherry said. In some cases, it could be as high as $15.
To find out about the fees and deadlines associated with your particular credit card, check your credit card agreement, look at the fine print on your bill or call your issuers to find out more details.
Universal default
There's another, bigger thing to worry about if you're late on your credit card payment. About 40 percent of card issuers have a clause called ``universal default'' in their credit card agreements, Arnold said.
This means they have the right to increase the interest rate you pay if they see on your credit report that you've been late on a payment to another creditor.
Let's say you've had a credit card with Company A for 10 years and you've never been late on a payment. But let's say you were late on a payment to Company B for one reason or another -- either you were just late in making the payment or you were contesting the bill. It doesn't matter. If Company A has a universal default clause, the issuer has the right to hike your current interest rate, which may be 8 percent, to 20 percent or higher.
``It's so unfair to consumers,'' Sherry said.
Arnold said it's all the more reason to make sure you're always paying on time or to find cards without these universal default clauses in them. Again, check with your card issuer to find out if your card has this clause.
For the rest of the article, please click here:
http://www.ohio.com/mld/beaconjournal/business/9935542.htm
_________________
Regards,
Curtis Arnold
Board Monitor
http://www.CardRatings.com
20K+ Credit Card Reviews
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
posted by CardRatings.com at 9:57 PM
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