As the leaves fall, and the days grow shorter, ’tis the season for all sorts of ghosts, ghouls and zombies to roam the neighborhood in search of fright and fun. Yet for some people, the scariest person to visit their house this fall will be the mail carrier, due to the surprises that may be lurking in their credit card statements.
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So before you open up any envelopes this year, be prepared for the following terrors lurking on your credit card statements, and learn how to overcome them.
1. Horrifying Late Fees
Are you sure your last payment arrived on time? Card issuers can impose late payment fees of up to $35, even if your payment is late by just a couple of days. Fortunately, there are two ways to ease your fears. First, most card issuers will waive an occasional late fee upon request. In addition, federal regulations now prevent card issuers for charging late fees that are higher than the outstanding balance, so you can’t get a $35 late fee on a $5 balance. Finally, cardholders should be sure to set up email and text reminders of payment due dates, and use reliable electronic payment systems rather than mailing checks.
2. Monstrous Penalty Interest Rates
There is a demon hiding in the terms of nearly every credit card, waiting to escape and wreak havoc with your finances. When cardholders fail to make a minimum payment, the interest rate can transform into a frightening figure of 30% or more, called the penalty interest rate. Like an evil curse, this rate may apply indefinitely, but the spell can often be broken by the card issuer once customers have made on-time payments for several months in a row. (Taking care of your credit affects more than just your credit card interest rate — over a lifetime, you may be paying tens of thousands of dollars more in interest than someone whose scores aren’t scary-low.) You may want to check where your credit stands before you apply for a credit card by looking at your credit scores – you can get them for free on Credit.com — to figure out which interest rate you’re likely to qualify for.
3. Mysterious, Unauthorized Charges
With all of the scary, high profile security breaches in the news, it is only a matter of time until unsuspecting cardholders find fraudulent charges buried in their statements. In fact, card issuers themselves have been caught cramming unauthorized charges for little-needed “services” such as credit insurance. Like a creepy insect that hides from the light, these charges are often small and go unnoticed among dozens of legitimate transactions. To calm your nerves, remember that the Fair Credit Billing Act ensures that cardholders are only responsible for paying a maximum of $50 for any unauthorized charges, and the vast majority of card issuers have $0 liability policies. However, it is up to cardholders to identify and report these unauthorized charges.
4. Crazy Cash Advance Fees
If you dare to insert your credit card into an ATM, you may have a terrifying surprise waiting for you in your next statement. With most cards, expect to pay a cash advance fee of either $10 or 5%, whichever is larger. In addition, the card issuer will apply a higher interest rate for cash advances. Finally, cash advances will incur interest from day one, with no grace period.
Even more frightening is the possibility that a card issuer could apply these terms to other transactions it deems to be cash advances. For example, some cardholders have used their credit card to reload debit cards, only to find out later that their transactions were classified as cash advances.
5. Debt Demons
For many, the scariest number on their credit card statements is their outstanding balance. Credit cards make it so easy to spend money that cardholders are at risk of losing track of their charges and getting buried by debt. Once interest and fees are considered, cardholders can feel like they’re trapped in a nightmare that they can’t wake up from. This is one demon that has to be faced head-on. To avoid being caught off guard, cardholders need to stare straight at their balances every day (identity theft experts recommend it as a habit for everyone), and it is now easy to do so online.
More from Credit.com: ▪ How to Get a Credit Card With Bad Credit ▪ The Credit Card Payoff Calculator ▪ The Easiest Credit Cards to Get Jason Steele has worked as a computer systems administrator, a commercial pilot, and a contributor to several of the top personal finance sites as an expert on credit cards and travel. He is a graduate of the University of Delaware with a degree in History.