Paying Your Credit Cards Late Can Cost You - Big Time

If you have got got been late with a payment lately, you've already noticed that credit card companies have discovered a new manner to generate a great deal of extra income. The average late fee today is $35.00, if you owe more than than $1000. Since the national average for American households is $8,000 of credit card debt, that stands for a ample pool of possible income for creditors, and they're going after it aggressively.

In fact, up-to-the-minute income figs demo that some 25 percent of all income derived by credit card companies is generated by late payment fees. When you factor in punishments for exceeding credit limits, that percentage leaps to 33. That agency that 1/3 of all the income generated by credit card companies come ups strictly from penalizing cardholders for disbursement too much or not paying on time. In 1995, income from punishment fees accounted for lone 18 percent of the companies' profits. The new figs stand for almost a doubling of that income - a startling revelation.

There is another figure that doesn't demo up in those numbers. If you're late with a payment, especially if it's during a promotional time period of low interest, your interest rate could skyrocket. For example, I recently received an offer from a credit card company that offered a six-month rate of zero percent to new customers.

That sounded great, until I looked at the mulct print. If I was late once during that promotional period, my interest rate would have got jumped from the usual 13 percent to 23 percent. (Of course, I also would have got had to pay a $39.00 late fee.) That was bad enough, but if I had been late a second time, my interest rate would have got soared to a staggering 29 percent! (And another $39.00 late fee.)

Does that sound outrageous? It does, but it's not unusual in today's credit card world. For example, back in 1988, only about 47 percent of credit card companies would have got raised a customer's interest rate if they paid late. Today, that number have risen to some 76 percent! That agency it's more hard now to happen a company that WON'T rise your rates. And that tendency isn't likely to change in the close future, because it's a manner for credit card companies to generate huge profits.

So if you carry a credit card debt, it will pay you, in more than ways than one, to do your credit card payments on time. If you don't, you could happen yourself seriously in the red, for a long clip to come.

Copyright © Jeanette J. Fisher