Watch Out for Credit Card Fees

Whenever you open a new credit card account, it is important to realize that at some point, credit card fees are likely to come into play. In fact, depending on the credit cards you use, these fees may come into play immediately. And you can end up losing hundreds of extra dollars to the credit card companies in fees.

Interest fees

Interest fees are especially frustrating. You get a great intro rate, and then the rate ends and your interest rate skyrockets. If you are late for a payment, or go over the limit, though, your intro rate disappears immediately. Even worse, you can get slammed with higher interest rates if you are late for a payment on a different debt. And some credit cards will up the interest fees if you even apply for another credit card. Hidden in the fine print is a clause that basically says the credit card can raise rates at any time, for any reason.

Other fees

If you are close to your limit, your interest charges can actually put you over the limit (since the interest is added to the balance). This can trigger a hefty over the limit fee (usually between $25 and $35, but can be even higher). If you are late you can get a fee. And if the late fee puts you over your limit, you'll get another fee. Sometimes all the fees add up enough that those deeply in debt can't make the minimum payment (spurring another fee -- you can see where this viscious cycle is going). Credit cards for those with bad credit also add set-up fees and other fees that can eat into a low limit at the outset.

A word about bank cards

Watch out for bank cards that act as credit cards, but are not. You need to make sure that you don't get caught with "insufficient funds" or you will be charged fees. Bank cards look and work like credit cards, but they are usually attached to a checking or savings account, and that can mean problems if you accidently charge something with the card.