June 2,2009
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Using CC's Wisely, Pt.3
Pay your bill on time.With the passing of the new credit card act which is due to become effective February 2010, the required 21 day advance notice for payment due dates will give the consumer more flexibility in meeting deadlines for payments. Credit cards are not like mortgage payments, auto loans, and other miscellaneous loans where typically the consumer is given five to ten day grace periods. For example, if the card payment is due on the 10th, late charges and additional interest begin to accrue at the end of business on that same day. Some lenders were unfairly cutting the payment deadline off as early as 2p.m. the same day as the payment due date. However, this too has changed and lenders must credit all payments on time that are paid by 5p.m. on the payment due date. This will be particularly helpful to those who make their credit card payments on line.
Delinquent credit card payments are costing consumers billions of dollars in late fees and additional interest. Missing just one payment means a higher rate of interest; couple that with the penalties you get hit with, and it can actually end up costing as much as 25% more for the item. There goes your savings. Don't get caught off guard. Setting up automatic credit card payments online is a great way to avoid late charges and penalties. Additional payments can also be processed online if needed. This is particularly helpful when you have a little additional cash to apply toward debt reduction.
Be wise with cash advances. Typically, cash advances come with a higher interest rate not to mention the 3 or 4% hidden fee just for cashing one of those credit card checks. That's right. HSBC Discover is even tying Balance Transfers to Cash Advances at 27% interest. Unheard of! Read the fine print. Those checks are costing you additional fees and higher interest. Consumers need to calculate how much the cash advance will add to the card balance and the length of time it will take to pay it back before cashing in. Again, if the money isn’t in the bank to pay for it, don’t spend it. You'll be losing more than the interest.