ROCKVILLE, MD - Recent reports of rising credit card fees point out the need for people to read and understand their credit card agreements and monthly statements. Fees range from just a few dollars for a small cash advance to more than $30 for returned checks.
"Most people are concerned only with making their minimum monthly payment," said Steve Rhode, president of Myvesta.org, a nonprofit financial solutions organization. "As long as they can afford the amount that's in the little box at the bottom, they don't pay attention to details."
Rhode goes on to say, "It's not unusual for us to see people who are paying more than $500 a month for late payment, over-limit, returned check and cash advance fees. For example, last month we assisted a client who was paying $870 a month in late and over-limit fees. That's someone who needs emergency help."
When reviewing new client cases, Myvesta.org finds people are currently paying an average of $60 in total monthly penalty fees to credit card companies. The most common are the late and over-limit fees, which typically run $29 each.
"Late fees can be dangerous," Rhode said. "If a person is only making the minimum payment, one late fee can add an extra 20 months and $355 in interest to the debt." This example is based on the average credit card debt of $1,800 and a late fee of $29.
"All fees aren't necessarily bad," Rhode said. "If you end up paying an annual fee make sure that you get value for it, such as 24-hour access to customer service, rebates and/or bonus points. Good service can be worth the extra expense."
Myvesta.org offers the following primer to help people understand the various fees and how they are calculated:
"Most fees are for rule-breakers. It's possible to avoid all penalty fees if you pay on time, stay within your credit limit and pay with sufficient funds," Rhode said.
"Also, don't be afraid to negotiate with the credit card company to remove the fee if you accidentally pay late or go over your limit. It costs them more than $100 in marketing costs to attract a new customer. It's likely they will remove a one-time fee rather than lose you as a customer," Rhode added.
"The best way to protect yourself from rising credit card fees is to read your statements every month and understand your credit card company's rules. You'll protect yourself from fraud and inaccurate postings on your account, too.
For example, we've heard from an increasing number of clients who are finding unexpected charges, such as auto club memberships, disability insurance and credit life insurance on their statements. If they hadn't paid attention to their statements, those charges would have gone through unnoticed," he said.
Myvesta.org is a national, nonprofit financial solutions organization headquartered in Rockville, Md. Founded in 1994, Myvesta.org has helped more than four million people through its programs and educational resources. The organization is committed to helping people resolve past financial mistakes, manage current financial responsibilities and find financial peace of mind. Myvesta.org's programs and services include debt management, crisis resolution, online bill management, creditor problem resolution, coaching and Financial Recovery tm counseling. Prior to April 2000, Myvesta.org was known as Debt Counselors of America ®.
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