I’m a pretty unique guy. I do not use a credit card. Why? I like using ink and writing checks. I enjoy the process of using “real money” and I simply dislike the “hassle” of managing credit card payments. Also, I have no desire to pay the interest, fees, or penalties associated with carrying a credit card balance. (Plus, it takes too much Ink to write all those checks.) Sure, I could pay my credit card balances off “in full” at the end of each month, but I have found that I will spend MORE whenever I use a credit card than I do when I use cash. Now, I may not be able to persuade you to give up credit cards forever, perhaps I can motivate you to get out of credit card debt as quickly as you can so that you can avoid the following FEES!
Interest: While not technically a “fee”, credit card companies charge you interest on the money that you borrow from them. According to Bankrate.com, the current AVERAGE interest charge associated with a “standard” credit card is about 13%. The greatest motivation for getting out of credit card debt (for me) was the idea of never paying credit card interest again!
Late Payment: If your payment arrives late (for whatever reason) you will be charged a late payment fee. I did a quick “search” and found that the average late fee associated with credit cards is $35! Remember, it does not matter if the postal service “loses your check”, you still have to pay the late fee. (If you get hit with a late fee, it never hurts to call and ask (politely) for them to waive the fee! It just might work.) Again, because I do not use a credit card, I never have to worry about paying a late fee.
Over-the-limit Fee: Credit cards have a pre-set limit, which indicates how much money they are willing to loan you. If you exceed this limit, you will be assessed an over-the-limit fee. Guess what? If you are “close” to the limit, and only pay your monthly minimum, and your card accrues interest, and the interest plus the balance = over your limit, you can (and will) be hit with an over-the-limit fee. Oh yeah… The average over-the-limit fee is about $30!
Payment processing Fee: If you find yourself in a ‘bind’ many credit card companies will allow you to pay via your telephone. Guess what? You’ll pay a FEE to make a PAYMENT. Not only will you be sending them a payment, they’ll gladly charge you for the privilege.
Cash Advance Fee: Many credit cards allow you to use your card at an ATM. But, they charge a pretty-penny for this service. In most cases, you will pay a 3% cash advance fee, up front, regardless of whether you pay off your entire balance at the end of the month. If you get a cash of advance of $1000, you’ll pay $30.
Annual Fee: While many credit cards do not charge an “annual fee”, some do! That’s right, you pay them for the privilege of carrying their card in your back pocket, regardless of whether you use the card or not!
Convenience Check Fee: Those nifty checks that you receive with your credit card bill are called “convenience checks.” Use one, and the credit card company will treat it like a cash advance and charge you a cash advance fee!
These are just a few of the fees that credit card companies CAN and DO collect each year. (According to this report in USA Today, credit card companies collected over $17 BILLION in fees last year. Yes, friend, that’s BILLION, with a “B”. How much is $17 BILLION Dollars? Well, if we equally divided $17BILLION between, say, 300,000,000 Americans, each man, woman, boy or girl would receive a check for more than $56!) My advice, based on two years of not having to WORRY about these fees and charges? Get out of debt, stay out of debt, use cash, and relax. Let somebody else pay your share of the $17BILLION!