When consumers misunderstand the 'fine print' regarding their credit cards, the credit card companies often make more money through fees and penalties
Baltimore, MD (PRWEB) August 12, 2008
Interest rates, late fees, minimum payments - a credit card statement carries a lot of information that can be confusing to cardholders. How are finance charges calculated? Why are late fees sometimes assessed even if the payment was sent before the due date? What exactly is a grace period? Agencies that provide CareOne Credit Counseling Services know that it can be difficult to take a more proactive approach to understanding your credit card statement and avoiding unnecessary fees. To help, these providers are offering a series of tips and resources - including http://www.CareOneCredit.com's free article library - to assist consumers in dissecting their credit card statements.
"When consumers misunderstand the 'fine print' regarding their credit cards, the credit card companies often make more money through fees and penalties," says CareOne Credit Counseling Services Spokesperson Clarky Davis. "Credit card users can stop paying more than they have to by learning what some of these common credit card terms, rates, and fees really mean, and we want to help them do that for the sake of minimizing their overall credit card debt."
Below are definitions and explanations of common items found on a credit card statement:
Interest Rates - An interest rate is essentially what the cardholder pays the issuing bank or company for the privilege of being extended credit. As an extremely simple example of interest in action, someone may make a $100 purchase on a credit card with a 10% interest rate. That means when the total is paid back, an extra 10% is also paid, for a total of $110. With credit cards, interest rates are setup as annual percentage rates (APR) - the amount you pay over a year. The APR is the rate advertised as the interest rate when someone applies for a credit card, and it's used to calculate monthly finance charges.
Annual Fees - Some credit cards charge users a yearly fee just for using the card. This is often deducted directly from the credit limit on the card (meaning if not paid off immediately, it will accrue interest just as a purchase does).
Late Fees - It's not unusual for even well-meaning credit card users to occasionally get hit with a late fee. This (often hefty) fee is charged if your payment isn't received and recorded by the credit card company on or before your due date. It doesn't mean a check should be postmarked on the due date. Always send payments early enough to avoid an unexpected late fee - that includes electronic payments which can sometimes take a few business days to process.
Grace Periods - Most credit card companies offer what is known as a grace period between a purchase date and the date that purchase begins accruing interest. If the purchase is paid off during that period, no interest is paid. What's not as commonly known is that grace periods generally only apply if the card's previous balance was paid in full. The only way to assure that grace periods are in effect is to pay off credit card balances in full each month.
Agencies that provide CareOne Credit Counseling Services offer additional in-depth information about using credit cards responsibly in their article library, including a comprehensive resource on understanding your credit card statement.
About CareOne Credit Counseling Services
CareOne Credit Counseling Services is a service mark of 3C Incorporated. CareOne agencies are industry leaders committed to providing consumers with education and debt management services related to improving and maintaining their financial health. CareOne agencies have helped over 4.5 million people pay down debts through their solid relationships with over 220,000 creditors.
For more information about CareOne Credit Counseling Services, please visit http://www.CareOneCredit.com, or contact Clarky Davis at (410) 925-9769.
CareOne Credit Counseling Services
8930 Stanford Blvd.
Columbia, MD 21045
Phone: (410) 925-9769