Check your Interest Rates and Grace Periods “AGAIN”
I always find it interesting when banks take an old tactic that has lost steam and just propped it up again. A few years back, many banks saw consumer backlash for holding onto payments past their grace period to ultimately charge consumers those pesky late fees. They add up, too: imagine paying $100 a month on your credit card, a $35 late fee can add a considerable amount of fees to those cards. Additionally, because a transaction is late, the banks are then prompted to automatically raise your rates.
I’ve received several complaints that many banks such as CitiBank (NYSE C) and Bank of America (NYSE BAC) have virtually eliminated grace periods altogether and for “some reason” payments this past holiday were “delayed” in processing. What does this mean? Well, imagine sending in your payment a week before it was due, figuring well you have more than enough time to get it in. Well, with your grace period cut to zero days, you are now considered late starting the day after it was due. While arguably a payment is due on its due date, many people have taken the grace period as a time to make sure that shipping delays don’t affect their payments. I have serious doubts that the post office has had a sudden rise in delayed credit card payments so this rests squarely back on the credit card companies themselves.
My advice, contact your bank and find out not only your current interest rate, but also your grace period. I imagine that many will be surprised to find that their rates may have in fact gone up and their grace periods reduced or eliminated altogether
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Comment by Bookie01 on 17 January 2008:
Most people don’t worry about the fees, as they are ’such a small thing’, but it might end up being expensive at the end lol
Comment by Riley Poole on 17 January 2008:
You are right, they don’t worry about the nickel and dimes but they do add up and consumers would be surprised how much. If you have 5 cards, and each is charged a fee every month, that alone adds up to $2,100.00 a year in fees just for the late charge. This of course assumes a $35 late fee which I believe is pretty standard.
Comment by Caps on 18 January 2008:
So true, I used not to worry about the fees, I was kinda used to them, but one day I did the math of how much we pay on bank fees during the year, and I was very impressed!
Comment by InOut on 18 January 2008:
Wow, $2,100 in a year is a lot, at least for me it is a lot of money, some people work a month or two per year only to pay those fees!
Comment by Jung on 18 January 2008:
yeah, it is so easy to get a credit card nowadays, anyone can get one with a simple phone call, I wonder why Visa and other companies are so rich lol
Comment by Economist on 18 January 2008:
Most people don’t worry about their fees and that is one of the most wrong things someone can do, economically talking. We should be aware of ALL our expenses, it doesn’t matter if it’s 10 grand or a few cents.
Comment by Frank palmer on 24 January 2008:
Ah ha, you are saying now what i’ve been telling my friends and family for some time now. But they look on me as a grumpy old man obsessed with the minute details
Comment by Nisa on 25 January 2008:
Bank fees are the thing that I hate the most in my entire life!! It’s like them getting free money. And it’s not cheap too. Imagine having to pay $32 fees for going overboard for only $1 without any warning (or in this case, late a few days and not our fault too)
Comment by carl young on 25 January 2008:
Very good advice. I’ll call my bank asap and double check my interest rates and grace periods. Hoping that what you have prophesied doesn’t happen in my case
Comment by DayDreamer on 24 February 2008:
with dropping interest rates (may fall upto 2% as per experts) banks need something from your pocket and they are taking it in this form. Hidden charges usually are hidden inside ur contract agreement and u never notice them untill bank quotes them.