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October 4, 2007

5 Hidden Credit Card Fees

By Vanessa Cohen

A credit card is a fantastic convenience for most of us, allowing us the freedom to purchase that Louis Vuitton purse, even though we happen to be strapped for cash.

But there is a down side to using your credit card – those hidden credit card fees that they charge you without your knowledge. Be honest; when was the last time you really, I mean really, took a good look at your credit card bill?

Well, next time it arrives in the mail (and you know it will), open up that envelope and go over it with a fine-toothed comb because chances are that you’re being charged for things you weren’t aware of.

What should you be on the look out for? Well, here are a few hidden credit card fees you probably weren’t aware of.

Hidden credit card fees #1
Foreign exchange transaction fees

Let’s say you suddenly decided to pick up and head to Europe for a 4-day vacation, and forgot all about getting your hands on some euros before you split. Oh, that’s okay, you think to yourself, I’ll just use my credit card, it’s easier anyway.

Well, you may return home to a rude awakening when your bill shows up in the mail. While the exchange rates may not be so painful (it’s typically the best you can get), the fact that credit card companies charge anywhere from a 1% to a 4% “conversion” fee will definitely make you feel the sting of those Italian shoe purchases.

Hidden credit card fees #2
Over-the-limit penalties

If you happened to exceed your $5,000 limit when you purchased that hot little black dress you’ve been eyeing, your credit card company will let it slide. But hey, there’s a catch.

The minute you exceed your limit by even a penny, you can bet that there will be an over-the-limit fee of up to $40. So be wary of your spending.

Hidden credit card fees #3
Late payment penalties

If you make a late payment, you can definitely expect to pay late fees, but did you know that you are inadvertently giving the credit card company the right to raise your interest rates?

I’m not sure if you read the fine print of your contract, but I’m pretty sure you probably had more interesting things to read. So while you were busy finding out about Tom Cruise’s latest couch attack, you didn’t realize that a late payment gave the credit card company all the ammo it needed to raise your rates.

The worst part is that, if they find out you made a late payment to any of your other creditors, they have the right to raise your interest charges as well.

Hidden credit card fees #4
Charges for nothing

Let’s say you have four credit cards, but you only use three. You haven’t touched that other one in months. Well, guess what? The credit card company will charge you a fee for not using it.

Think about it; they have to make money somehow so if you’re not using it, they need to cash in. Most companies charge you a fee if the card has been inactive for 6 months, but some charge for even shorter intervals.

Hidden credit card fees #5
Account closure charges
So rather than just let it sit there, you think, I’ll just cancel it, that’ll solve everything, right? Wrong. Even if you wanted to cancel your card, many credit card companies now charge a “closure” fee.

Of course, not every company does this, but there are enough out there that you need to find this out before you use it for the first time.

Credit card fees

Being well informed is important, so reading your credit card agreement is pertinent to your saving a couple hundred bucks.

The next time you start thinking that platinum would make a great addition to your other cards, remember that there may be a significant price to pay.

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