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Pay your credit card bill on time?

Old 10-20-2009, 07:52 PM
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Default Pay your credit card bill on time?

Latest bank fee is for paying off credit card on time every month - USATODAY.com

Latest bank fee is for paying off credit card on time every month
By Sandra Block, USA TODAY
You floss regularly, yield to oncoming traffic and use your credit cards judiciously, dutifully paying off your balance every month.
You may believe that your exemplary behavior shields you from unexpected credit card fees. Sadly, that is no longer the case.
Starting next year, Bank of America will charge a small number of customers an annual fee, ranging from $29 to $99. The bank has characterized the fee as experimental. But card holders who have never carried a balance or paid late fees could be among those affected.
NEW RULE PROPOSED: Fed wants banks to get customer OK to pay debit card, ATM overdrafts
CALCULATORS: How long will it take to pay off your debt?
Citigroup, meanwhile, has started charging annual fees to card holders who don't put more than a specific amount on their cards, typically $2,400 a year. Other banks are charging inactivity fees if customers don't use their credit cards during a specific period of time. You heard that right: You could be spanked for staying out of debt.
These fees are the credit card industry's response to credit card legislation that will, among other things, restrict credit card issuers' ability to raise interest rates on existing balances. Credit card issuers are looking for ways to raise income before the new rules take effect in February. During the first quarter, 27% of credit card offers included annual fees, up from 18% a year earlier, according to Synovate Mail Monitor, a credit card direct-mail tracking service.
Curtis Arnold, founder of CardRatings.com, says he expected credit card issuers to raise annual fees after the legislation was enacted. What he didn't expect, he says, "was that good customers were going to be hit."
Fortunately, if you've paid off your balance on time every month, you probably have a good credit score. And when you have good credit, you have more choices.
What to do if your card issuer starts charging an annual fee — or increases the fee you're already paying:
•Call and complain. Check your credit score first to make sure you're on solid ground, says Adam Levin, founder of Credit.com, a consumer website. If you have a good score and you've been a good customer, the lender may be willing to waive the fee to keep your business.
•Weigh the benefits of rewards against the annual fee. The days when you could get a rewards card with no annual fee are numbered, Arnold says. If your rewards card charges a fee, you'll need to figure out whether the value of the rewards exceeds the fee.
That's not always easy to do, particularly with cards that give you airline miles, says Chris Fichera, associate editor for Consumer Reports. Rewards miles often come with restrictions and expiration dates, making it difficult to figure out how much they're worth, he says.
"A lot of airline cards are not the best deal unless you can combine them with a frequent-flier plan," Fichera adds.
If you're not a frequent flier, Fichera says, you're probably better off using a card that gives you cash back. As long as you can estimate how much you spend, it's easy to figure out whether you'll get enough cash back to justify the annual fee.
•Leave. If your card issuer won't waive the fee, you'll have a choice: Pay the annoying fee or close your account. Unfortunately, this decision isn't as clear-cut as it sounds, because closing an account could hurt your credit score.
One of the factors used to calculate your credit score is what's known as the "credit utilization ratio," which is based on the amount of credit you have outstanding as a percentage of your total available credit. When you close a credit card account, the amount of your total available credit shrinks, which could lead to a higher utilization rate. This ratio accounts for 30% of your credit score.
In addition, closing an account you've owned a long time could affect your credit history, another factor used to calculate your score, Fichera says.
Still, if you aren't carrying balances on your other accounts and the card is relatively new, closing your account is worth considering. Even now, there are good deals out there, particularly for card holders with good credit, Arnold says. For example, the Fidelity Rewards American Express card pays 2% of cash back to a Fidelity account, with no limits on cash rewards and no annual fee.
If you don't care about rewards and just want a credit card that doesn't charge an annual fee, consider applying for a card through a credit union. Many credit union cards charge no annual fee and offer below-average interest rates.
Associations, such as the USAA, which provides products and services for military personnel and their families, also offer good deals on credit cards, according to Consumer Reports.
Sandra Block covers personal finance for USA TODAY. Her Your Money column appears Tuesdays. Click here for an index of Your Money columns. E-mail her at: [email protected]. Follow on Twitter: www.twitter.com/sandyblock
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Old 10-20-2009, 08:46 PM
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Ive never had a credit card, only debit cards, is it really worth the time and fees that banks charge to get airline miles, hotels, etc?
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Old 10-20-2009, 08:52 PM
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Hopefully there will be more rational competition spring up for credit cards maybe without so many crazy fees after the markey evens itself out.

I bank at this small bank that covers only South Florida, Riverside..... I don't think I've been charged a fee at all for the past 6 years. They are great, I honestly can't say enough good things about them (so far). I guess they figured out a way to make money without nickel and diming their customers to death...imagine that!
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Old 10-21-2009, 06:20 AM
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Hotshot, if you do it right, it's a great way to get stuff for money you were going to spend anyway.
I charge nearly everything on credit cards, then pay all of it in full by the end of the month. I get all the points/cashback without having to deal with fees or charges.

The key is not to buy anything you really can't pay for at the end of the month.
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Old 10-21-2009, 08:15 AM
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Originally Posted by hotshot View Post
Ive never had a credit card, only debit cards, is it really worth the time and fees that banks charge to get airline miles, hotels, etc?
That's not the only reason people get credit cards. Credit cards are a primary source of building credit. You won't be able to get a good rate on a car loan, mortage, (private) student loans, etc. without a credit history. Having those installment loans will also help build your credit, but you won't get those loans in the first place without good credit. Also, banks aren't the only ones who look at credit - so do prospective landlords, cell phone companies, future employers, etc.
Like someone else said, the key is to use it responsibly.
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Old 10-21-2009, 12:33 PM
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This is a result of the gov't regulating credit card interest rates. They have to make money some how.

If you don't like the fact that you have an annual fee now, just cancel your credit card.
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Old 10-21-2009, 12:55 PM
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Originally Posted by hotshot View Post
Ive never had a credit card, only debit cards, is it really worth the time and fees that banks charge to get airline miles, hotels, etc?
Yeah, you really should get a credit card so long as you pay it off each month. I charge everything and pay it off each month. I have one card where I get cash back and another card where I get points that I can use to buy stuff. It really adds up! You'll wish you had done it sooner.

A lawyer friend of mine that specializes in creditors' rights always suggests using credit cards for purchases because it is easier to dispute charges than with a debit card.
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Old 10-21-2009, 01:40 PM
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Credit Card Company: Boo Hoo...It's all the governments fault that we aren't making money! What should we do? Charge the people who follow the rules? Brilliant! HAHA

I can see the executives sitting in the board room discussing this and the two guys from Guinness show up just as one of the bone heads at the table has this idea...Brilliant!!!

Originally Posted by FlyingNasaForm View Post
This is a result of the gov't regulating credit card interest rates. They have to make money some how.

If you don't like the fact that you have an annual fee now, just cancel your credit card.
Your not suggesting that the government should stop regulating the credit card industry? I am thinking you are being facetious.

The credit card industry is not losing money because of government regulation, they are losing it because of predatory lending practices coupled with taking on high risk customers. It makes no sense that a lender would allow a customer to borrow 5, 6, even $10,000 when that client has defaulted on loans, declared bankruptcy, has garnished wages, etc. The real problem with the credit card industry is their overwhelming greed.

If the credit card companies wanted to stop losing money they could begin by not paying billions of dollars in bonuses (and the excuses of "keeping the talent" is bologna). They can choose better customers, reduce variable and key interest rates, reduce fines and fees, etc.

The basic business model of a lending company is very sound. The problem is that when you turn away your best customers you lose money, when you loan to those that have no way of paying it back you lose money, when you have billions of dollars in overhead you lose money, and so on and so on...

The credit card companies have proven time and time again that they do not have self control. They can't help themselves! They have issues! As a result of years of reckless behavior the new regulation on these companies is well overdue.

FlyingNasaForm, you are spot on that if you don't like your fees or card CUT IT UP AND THROW IT AWAY. Call another company and don't settle until you get what you need. By the way, FlyingNasaForm, I love the name!

Last edited by Tiger2Flying; 10-21-2009 at 04:35 PM.
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Old 10-21-2009, 05:57 PM
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Originally Posted by hotshot View Post
Ive never had a credit card, only debit cards, is it really worth the time and fees that banks charge to get airline miles, hotels, etc?
I think I have read probably some of the dumbest things ever in response to your question.

LISTEN UP PEOPLE

You DON'T need a credit card.

1. You build credit by paying bills on time. For example, phone, electric, cable, etc. You even build credit for showing rent payments on time. YOU DO NOT NEED A CREDIT CARD TO ESTABLISH A CREDIT HISTORY.

2. Since you have a debit card, you can do everything you want with it instead of using a Credit Card.

3. "But you need a credit card for emergencies". Not if you plan correctly and have a contigency amount of cash set aside in one of your accounts.

4. "If you have a credit card, you get rewards". Credit card companies are in the business of making money. And because a lot of people can't pay their bills on time, and the fees associated just owning a credit card, they can afford to give cheap rewards in order to keep you slaved to them. If you are the type to pay your account on time each month, you can do this if you have a no fees credit card ... which is increasingly becoming rare to find.

The verdict. Unless you plan on using money that you don't have ... which is the only reason why one would have a credit card ... and a very dangerous game to play, DON'T own one. You will find the riches people out there are those that don't.
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Old 10-21-2009, 06:37 PM
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Originally Posted by KC10 FATboy View Post
I think I have read probably some of the dumbest things ever in response to your question.

LISTEN UP PEOPLE

You DON'T need a credit card.

4. "If you have a credit card, you get rewards". Credit card companies are in the business of making money. And because a lot of people can't pay their bills on time, and the fees associated just owning a credit card, they can afford to give cheap rewards in order to keep you slaved to them. If you are the type to pay your account on time each month, you can do this if you have a no fees credit card ... which is increasingly becoming rare to find.
+1. Exactly - credit card companies make money...they charge merchants a percentage of each purchase and they charge the consumer. The credit industry is seriously shady also... I wish they had a tin-foil-hat-similie... But it's not hard to not have a credit card... Even with having an on time payment history with a credit card you can still get the shaft by lenders for bigger purchases.
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