I have yet to pay the first penny in credit card interest or fees.
Likewise, I've never paid
I never intend to pay such fees, although dodging them is getting harder -- the unintended, but I would argue, easily foreseen consequence of laws aimed at protecting consumers.
In the case of credit cards, a federal law fully in effect since
To make up for lost revenue, many card issuers have imposed annual fees and raised rates for cash advances, balance transfers and foreign transactions. They've also raised interest rates across the board (the law does not put a cap on rates). A study by the research firm Synovate found card issuers charged an average 14.7 percent the second quarter this year, up from 13.1 percent a year earlier despite the prime lending rate staying put at a measly 3.25 percent.
"Paying off your credit card debt is the only way to be unaffected by rate increases," said
If you have a balance, pay it off as quickly as possible starting with the card that charges the highest rate. Don't wait for the bill to arrive; if you have a few extra dollars, send them to lower your balance, Hardekopf advises. These "micropayments" save on the interest you pay (they lower the balance to which the interest rate is applied) and will help eliminate your debt more quickly, he said.
With both credit cards and bank accounts, comparison-shopping is essential to find the best fit for you (for credit cards, I want no-annual-fee, cash-back rewards cards, and for bank accounts, I want no-maintenance fee checking accounts I can link to savings or other accounts that count toward any minimum-balance requirement).
Comparison-shopping among banks is particularly important because many are eliminating free checking accounts and raising minimum-balance requirements and fees in response to financial overhaul regulations cutting into their profits.
"Start by asking your bank if it has an account that would be lower-priced than your current account," said
For example, if your bank has done away with free checking -- an account without minimum-balance requirements, per-check charges or maintenance fees -- you may find another bank that offers it, especially if you sign up for direct deposit or electronic statements, or conduct a minimum number of debit card transactions each month.
With interest rates so low -- except for credit cards! -- it may be better to choose a free checking account that pays no interest or only a small amount instead of one that pays a higher rate but imposes a monthly fee. For more tips on selecting and managing bank accounts, check the FDIC Web page www.fdic.gov/consumers and the U.S. government's Web site www.mymoney.gov.
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Personal Finance - Don't Get Caught in Sticky Web of Credit Card & Bank Fees
(c) 2010 Humberto Cruz