Cheap Debt Consolidation Loan

Written By:Calvin George

Are you ready for a big wake up call? I certainly was not prepared for the one I recently received concerning a recent credit card bill. What I thought a correct plan - a long term strategy to pay off my credit debt - actually backfired on me. I did a transfer balance from a high interest rate credit card to a new credit card that offered lower interest rates plus no interest at all for six months. I thought all was going along nicely until the rude awakening occurred and I realized I hadn't saved any money at all. Is the same thing happening to you?

So just what was causing me to pay more out of my pocket? It was all of the hidden charges that you don't hear about when applying for a credit card. Even though I thought I was doing the smart thing by transferring my balances to a lower interest card, I ended up paying way more than I expected.

Here are some of the hidden charges that are easily overlooked if you are not careful when choosing a credit card:

Annual Fees: There are credit cards out there that still charge annual fees steeper than what you might thing. In fact, most of the annual fees for credit cards today will run about $50 to $100 dollars. There are even credit cards out there that offer things like frequent flyer miles or vacation points that at some point can charge you an annual fee in order for you to cash in on your credits.
Hidden Interest Rate Increase: Most of us are usually unaware of sudden rate increases until it is way too late.

Here is a typical scenario: You apply for a credit card at an interest rate of 12.8% or less. You steadily make your payments, however you were late two times within a six month period. Yes, you paid the late fee and you realized your error, but the credit card company does not really care. Because of this error, your interest rate has now been increased to 19% or higher. And to top it all off, they did not tell you that it was changed. This happens quite frequently and ultimately means that it will take you more time to pay off your debt and you are giving the credit card company more of your money for your error.

Balance Transfers Will Cost You: So you are thinking that it might be better to transfer an existing balance from a high interest rate card to a lower interest rate card. Before you do so, make sure that the card that you are going to transfer your credit debt to is not going to charge you an arm and a leg. Many cards offer a 0% interest rate on transferred balances for the first 6 to 12 months, but some will charge you a fee to transfer your balance. Also keep in mind that after you reach the end of the 0% period, your interest rate might skyrocket to over 20%. This is why it is so important to read the fine print. Everything should be spelled out so that you know exactly what you have to pay upfront (if anything), when the terms of the financing are going to change and what they are going to change to. If you don't understand something, ask plenty of questions so you know exactly what to expect.

Cash Advances: While it might seem like a good idea to use your credit card as the way to quick cash, it may not be in your best interest financially. What at first may sound like a good idea will only cost you more in the long run. Cash advances from a credit card not only charge an upfront fee, but you will also pay a much higher interest rate on the total sum of the cash advance. The other thing that most companies won't tell you is that the amount you take out as a cash advance will stay on your credit card until any previous balances are paid off. In other words, any money you put down on your balance won't touch the cash advance balance until the remaining balance is paid. This allows the credit card company to earn extra money off the higher cash advance APR.

Miscellaneous Fees: These are fees that you will be charged only if you use a particular service. These fees include charges for making a payment by phone, set-up fees when you open up a new credit card account, and some companies will even charge you a fee if you ask for a credit limit increase that is approved. Again, in order to offset potential charges, it's important to get the rundown from your credit card company in regards to any and all additional charges.

Fees That Are Completely Avoidable: Unavoidable fees include late payment fees and over the limit fees. However, these are really the only fees you have the ability to control. If you never exceed your limit nor miss a payment, you won't be hit with a penalty fee. It's important to know the extent of your credit line and how much you have currently used. A common cause of over limit fees is not paying your credit card bill on time. This means that if your credit limit is $200 dollars and you have a balance of $185 dollars and are late on your payment - a late payment fee will be assessed putting your over the limit. Now that you are over the credit limit, you will be charged yet another fee somewhere upwards of $25 dollars or more. The fees just keep adding up.

Take it from someone who has been raked over the coals by a credit card company; make sure that you completely understand the fine print and beyond. Take the time to really research any credit card that you currently have as well as any other one that you are considering. Make some phone calls to the companies and ask those important questions regarding are annual fees, interest rate changes, and all other points mentioned in this article. Make sure that you are completely aware of penalty fees. Above all, be very diligent and pay your bills on time, if not early, to avoid all of these hidden charges.