A little tip for you...if you double your minimum payment on your credit cards, and stop putting new charges on them, you will have paid the card off within 3 years. This is true no matter how far in debt you are.

 by: Daryl Flagg

Have you ever wondered how much money a credit card company makes? Have you ever wondered how much of that comes from late fees? Everyone has and if you haven't you should because most likely you own a credit card, which means that these late fees has or could directly affect you.

As you have probably taken notice, credit card late fees are on the rise and have been so for awhile. There is enormous competitive pressure on credit-card interest rates and annual fees, and this has given way to a fee frenzy. For credit card issuers, late fees now represent their third largest revenue stream, (interest revenues and merchant fees rank first and second, respectively). In essence, those who pay late are now covering the costs for those credit card users who do not carry a revolving balance and those who file for bankruptcy.

So how much are credit card companies making from issuing late fees? Over the years we have watched the number of late fees charged to consumers jump to record-high levels. Late fees can range from $10 to as much as $40. The average late fee more than doubled since 1996 from $13.28 to $29.84. In fact, many major card issuers are now charging a $35 late fee. Let's assume that 100,000 people made late payments for a particular month and they were charged a late fee of $30 for doing so. This would add up to $3 million in revenue. As you can see, credit card companies are making a lot of money off of card holders and there is no slow down in sight regarding the increase in late fees.

Credit card companies are making a killing off the late fees they issue to their customers and they don't mind doing it because their ultimate goal is to make money. They are like any other for-profit business in that they sell a product or service for revenue. In the case of credit card companies, the product happens to be credit. These companies aren't just some "thing" sucking up as much money as they can. These "things" are run by man. And wherever man is involved, greed also becomes involved. These people are just like you and me. They may have a family to support, bills to pay, etc. Most people don't work just for the pure enjoyment, but for money, a source of income. And the more income we achieve the easier and better our lives become, supposedly.

Some of you may be asking, "So what do we do about the late fees?" Well there's an article that I wrote awhile back that you may be interested in. You can find this article at http://www.nextmonthonline.com/WhitePapers/Article1.aspx . It addresses several methods and tips to avoid having to pay a late fee. One method in particular that I would like to address further in this article is the Skip-a-Payment technique. If you happen to know that you can't pay your credit card bill for a particular month just skip it. Next Month Online is an independent company from credit card issuers. They allow their visitors to skip a payment for a nominal fee. This fee is generally 70% than your typical late fee. You will accrue no late fee and no bad mark on your credit report. Credit unions often offer this type of service for loans or mortgages, but first you have to fill out an application and then you need to qualify. With Next Month Online, there is no application to fill out and everyone qualifies as long as they have a credit card. Credit card companies are not very happy with Next Month Online because they are losing money every time someone uses the Skip a Payment service. This is by far the best service you can use if you know you will be late because you save a lot of money and avoid all the hassles that come with bad credit.

Credit card companies are not backing down from increasing fees. They, for some reason, do not see us as people who make mistakes once in awhile or people with other priorities in our lives. They want their money and they want it now! This is the reason you should not back down either. Hit them where it hurts, their pocket books. If you know you will be late for a particular month, just use a skip a payment service because the credit card companies will no longer be taking money from you, you will be taking money from them.

About The Author Daryl Flagg is the founder and CEO of Next Month Online. Next Month Online is a service that allows its visitors to skip credit card payments. They can be found at http://www.NextMonthOnline.com. Sign up for free! info@nextmonthonline.com

This article was posted on January 18, 2005

by: Tom Koziol

Obscene is usually associated with pornography while credit cards enjoy a more discreet association. At least that is the perception. This article will change your perception.

It is my belief, and may become yours after you read the 7 tricks, credit card issuers should be classified with pornographers. They have, I believe, only one purpose and that purpose is to screw every consumer using their cards as the tool.

I say that not because I am anti credit card. Far from it. I have eight in my wallet and use two of them on a regular basis. I also apply the anti-dote every month to their poisonous bites. But, I am ahead of myself and will give you the anti-dote at the end of this article.

By the way, this article only covers what I classify as the top 7 obscene, nasty ways credit card issuers relieve you of money that should rightfully stay in your wallet. I cover them all in a book I wrote which is in my bio at the end of this article.

This first trick is called the universal default penalty. As you may or may not know, credit card issuers regularly check your credit report for late payments on any of your bills. Even though you have been paying your credit card bill like clockwork every month and have never been late, you still can see a spike in your interest rate because you were late with, for example, your car payment.

The UDP clause permits your card issuer to raise your rate no matter in what account you were late. This clause is found in a document called Terms and Agreement which, by the way, you were given when your card was issued. Probably came in the same envelope.

You didn’t read it. I know you didn’t because the font is about 3.5 in size and it is written in legalese. You threw it away or put it in your file cabinet or desk drawer where it is still resting today.

This doesn’t give them the right to monetarily take you to the cleaners but they know you won’t read it so they take you to the cleaners. All legal by the way because the legislation is written for them and not for the consumer.

Proof of my contention is found in your Terms and Agreement and in the credit card laws. Take the time to read one or the other and you will use stronger language than obscene or tricks when you talk about credit card issuers.

Trick two is one called the over the limit fee. Simply stated, if you charge over your credit limit, you are penalized a sum of money. As of this writing, it is between $25 and $50, depending on card issuer.

Think about this charge for a minute. Who set your limit? The credit card issuer. You didn’t. So, if you have a $1500 limit, how can you over charge given their computer is preset with that amount and is supposed to block any more charges once you hit $1500?

Since the credit card issuer imposed the limit, how can they charge you a fee for exceeding the limit? If you exceeded the limit, they had to grant permission, right? If they granted permission, than they just reset your limit to a higher amount. So, if they reset your limit to a higher amount, you can’t be over your limit, can you?

Wrong. Read the Terms and Agreement. They have a little clause permitting them to do exactly what was just described without penalty to them but with a penalty to you.

I don’t know about you, but to me this seems like a punch below the belt.

Trick three is a neat little jewel called the special delinquency rate. If you have a card with a low interest rate, you may experience a rapid rise in that rate if you are late a certain number of times in nay specified time period. One particular huge credit card issuer has set the number of times to one. Ouch!

Trick four is the transaction fee. A transaction is nothing more than an action (charging a blouse for example) between you and the merchant. This results in an activity on your card. What else could it possibly do?

Well, since it resulted in an activity, a transaction fee is imposed. But isn’t that what the card is set up to do in the first place? The answer is yes but the transaction fee increases their profits so its inherent action (an activity) gives rise to a fee.

Trick five is called a maintenance fee. You don’t even have to use your credit card and you will be charged. You guessed it. The maintenance fee rears its ugly head. I call this a privilege tax because the company is charging you just because you have their card.

Trick six is a doozy called a service charge. This is a fee for specific services or imposed as a penalty for not meeting certain requirements. For example, applying for a card is considered a service, so a service charge is applied.

Trick seven sounds like one or two of the above fees but is actually imposed on top of all the others. An inactivity charge is imposed if you haven’t used your card for a certain period. For example, let’s presuppose a six month period. You would face an inactivity charge if you didn’t use it during that six month period.

Trick eight (yes, I know the article says 7 but this one is particularly onerous too) is the two-cycle billing trick. Most of us have cards that bill on a one month basis, i.e., charge today and payment is due next month.

Two-cycle billing uses your two previous months’ balances. The math varies a little bit by issuer so rather than give one across the board example, I’ll advise pulling out your Terms and Agreement. By law, this particular deviousness must explained in detail.

If you cannot understand their terminology, math or anything else in that section, ask your banker for an explanation.

OK, now that you know eight of the time bombs your credit card issuer has placed in your wallet, you are armed to take action. When I first opened this article, I said I would give you the anti-dote to their poisonous ways.

I pay the balance in full , a.k.a anti-dote, on every credit card I placed a charge by the due date shown on that card’s statement. You see, the Terms and Agreement does do one good thing for us consumers. It says if we pay in full by the stated due date, we will not face any of their myriad charges and fees.

It is that simple. I watch how much I charge and I pay the balance in full no matter how financially painful it seems at the time.

As a famous commentator used to say, End of story.

About The Author Tom Koziol wrote “Credit Card Capers: All Their Dirty Tricks Exposed” to level the playing field for consumers when it comes to their credit cards. For more information, visit: http://www.creditcardcapers.com. deadrun@jps.net

This article was posted on February 02, 2005