Indianapolis Recorder, Indianapolis, Marion County, 28 July 2000 — Page 4

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THE INDIANAPOLIS RECOPDiW

FRIDAY, JULY 28,20001

Credit card fees risind

Consumers should keep an eye on their statements

Special to The Recorder ROCKVILLE, Maryland—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 non-profit 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.” Rhodes 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 $870a 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 feestocredit 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 in the debt.” This example is based on the average credit card debt of $ 1,800 and a late fee of $29. “All fees are not 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 extra expense.” Myvesta.org offers the following primer to help people to understand the various fees and how they are calculated: Late Fees: Get your payments in 1 '■* i 4 v; i'

on time. In most cases, you will pay a late fee if your payment arrives one minute past the time due. Banks have extended their mail processing hours so that payments will be posted the day they are received, a benefit to late mailers. Always mail your payment as soon as possible. It is foolish to wait until the last minute. Over-Limit Fees: Know your credit limit. Credit card issuers establish your credit limit based on your ability to repay charges. If you exceed the limit, the issuer sees you as a bigger risk, and will charge you a fee each month that exceed the limit. Instead of incurring a fee, pay attention to your limit and call the issuers to ask for a higher credit line when you need it. Easier yet, never carry a balance that is more than 75 percent of your credit limit. Cash Advance Fees: These fees vary depending on the card company. Be sure to understand the rules for cash advances. Some card issuers charge higher rates of interest of cash advances than they do on purchases. You’ll likely pay interest from the day you take out the money and that higher cost will continue until the card is paid in full. Be careful. Taking cash advances to pay for daily living expenses is a sign of trouble. Annual Fees: More and more issuers are charging annual fees to make up for lost profits. The average annual fee is around $40. Annual fees can be a smart cost if you get top-notch customer services, rebates, frequent flier miles or other enhancements. Balance Transfer Fees: These are becoming more popular and expensive. Some issuers will charge as much as $50 for a balance transfer. Do the math to figure out if you’ll save money. In most cases you’ll save time and money by switching to a lower interest rate. Foreign Fees: Using your credit card during foreign travel just got more expensive. Some of the largest issuers are charging a small percentage for foreign transactions.

For many years that cost was absorbed by the banks, but no more.' 1 “Most fees are for rule-breakers'. ■ It’s possible to avoid all penalty* fees if you pay on time, stay withiri* your credit limit and pay with suffK cient funds,” Rhode said. “Also, don’t be afraid to negotiate with the credit card company td; remove the fee if you accidentally* pay late or go over your limit. It • costs them more than $100 in mar-' keting costs to attract a new cus-* tomer. It’s likely they will remove a* onetime fee rather than lose you asa customer,” Rhode added. “The best way to protect yourself • from rising credit card fees is to read • your statements every month andunderstand 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 in- 1 creasing number of clients who ai'e , finding unexpected charges, such^ as auto club memberships, disabihT ity insurance and credit life insut' ’ ance on their statements. If they hadn’t paid attention to their state--ments, those charges would have gone through unnoticed,” he said.'’

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