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By federal laws, credit card fees cannot actually be “hidden” from consumers, but that doesn’t mean that all credit card users fully understand how they are charged or what instances will result in fees or increases to existing rates. Sometimes, the fees are provided in the small print of the back of your statements, or only in the account disclosure statement you receive when you first open the account- so it’s easy to over look the fine details of credit card fees- and that is how they got the name “hidden”.

The only sure way for someone to skip the sometimes ridiculously high fees associated with credit cards is to pay their bill before it’s due, each and every month. In 1998, cardholders paid about $4.8 billion in penalty fees- which seems like a lot until you consider the fees of 2005- a whopping $12 billion. This leads to the conclusion that people are not paying their credit card bills on time and are not avoiding the penalties associated with late payments!

You’ll want to take a close look at your card member agreement. Some credit card companies are now recording receipt of payments received in envelopes other than the pre-printed envelopes up to 5 days after they receive them! In addition, where as just a few years ago you could be counted as “on time” if your payment was postmarked by the due date, now the majority of companies require that the payment must arrive before noon on the day it is due to be counted as on time. As if that wasn’t stringent enough, there are even many card issuers who have decided to shorten the billing periods from 31 days to 20 days!

Late penalties on credit cards are anywhere from $15 to $39. If the late fee puts you over your maximum limits, you’ll also get slammed with an over limit fee. Going over your maximum amount can also cause the card issuer to increase your interest rate as much as 24%.

Here’s a penalty you probably didn’t know about: if you are late on any of your creditors, a credit card lender could raise your interest rate. So even if you pay your credit card bill on time religiously, if you are late once with one of your other lenders, your credit card lender has the right to raise your interest rate! The institute for Consumer Financial Education in San Diego reports that about 40% of car issuers raise rates if they find their cardholders are late on other accounts.

How about companies that charge you a fee for having a card without a balance on it? Wells Fargo’s prime rate card will charge you $2 a month in minimum finance charges if you do not have a balance on the card!

Wonder what they do with all the fees they collect? Banks will explain the fees are there in order to cover their costs. It’s difficult to think they need these “hidden” fees when the regular and more well known charges like interest charges are bringing in over $80 billion each year, and an additional $31 billion a year is collected in cash-advance fees, balance transfer fees, annual fees and merchant fees!

Can you prevent yourself from having to pay these “hidden” fees if you use credit cards? Some of them. Try writing your check for at least your minimum amount due (more whenever possible) the very same day you receive the credit card bill. Put it in the mail the next day and you’ll never have a late payment. Even better than doing that would be to pay your bills online automatically each month, so there’s no way to forget to mail it.

You can also save considerably by choosing the right card for your spending needs and payment habits. Check for the best card on creditorweb.com, where there are hundreds of cards to choose from and information available on each to help you make the best selection. Make sure to keep an eye on changing terms of your card- if the interest rate increases or they begin charging an annual fee - transfer the balance to a better card.

In order to get out of your debt, you must apply the secrets of debt freedom. These tips are the foundation of becoming debt free and creating options in your life.

There is an old saying that talks about stupidity. It goes something like “the definition of stupidity is doing the same thing over and over again, expecting a different result”. For example, people don’t keep turning on a cold water tap expecting hot water to pour out. So why would you keep doing the same thing with your debt? If it isn’t going away you need to do something differently.

Ignoring the debt isn’t going to make it go away. Blaming others for your mistakes is of no help, but hoping something will change is even worse.

You have to effect change in your life and not wait for it to happen. At the end of the day you have to want to get out of debt to make that change to your financial situation.

As a little 8 year old I can remember that burning desire for a bicycle one summer, my parents were poor so I had to figure out a way to get it on my own. I must have shoveled 50 driveways that winter in the freezing cold (and it snowed heavy that winter) at $5 a driveway to make the money. But I did it because I had the image of that bicycle burned into my minds eye.

I don’t care if you owe $75,000, if you want out of debt bad enough, sit yourself down and figure out a way. Don’t blame anyone else for your problems; take a good hard look in the mirror. The person looking back at you got you into debt, and believe it or not can actually get you out of it.

During my career I have seen winners and losers deal with all types of debt. I can tell you without a doubt the reason why people get out of debt is because they don’t blame others, are serious about it, and do something to fix it. The main reason the losers are stuck with their debt is because they aren’t serious about resolving it.

Brian Tracy, a motivational speaker, once stated that “you only have options if you can save money. If you are in debt, you have no options.” What he means is you cannot quit your job, open a business, treat yourself to a luxury or even take a vacation. Being in debt severely limits your options in life. Once you find your reason for becoming debt free and plan it out, nothing can stop you.

There are a lot of great articles on getting debt help, some can do it all on their own and others may need help. Bankruptcy, Debt Settlement, and Credit Counseling are all viable plans. I personally believe (and have proven) that debt settlement does the least amount of damage to your credit and is the fastest and most cost effective way to debt freedom. Do your homework and start doing something about it.

About The Author: Richard G. Cooper is Founder & CEO at Total Debt Freedom Inc. Canada’s most respected debt settlement company. Total Debt Freedom offers debt settlement plans that can save you 50-70% of what you owe and get you debt free in 1 - 3 years. http://www.totaldebtfreedom.ca

Let’s imagine for a moment that you’ve just received your credit card bill in the mail, and you think the only purchase you made with it the previous month was at the gas station.  What do you do then, when you find three purchases at Old Navy, and a bunch of other purchases you know you didn’t make? 

Do you know what rights you have regarding fraudulent purchases on a credit card in your name?  How about your rights if you purchased an item with a credit card, but never received the products you ordered?

If these problems have not happened to you yet, you are lucky.  These are common situations credit card users face every day, and it can help you to know before something like this happens to you what your rights are, and what your responsibilities are in the matter.

When You Are Not Satisfied With Purchase

One of the benefits of using a credit card to make purchases is the additional protection they provide if you make a purchase that you are unsatisfied with.  For example, maybe you used a credit card to pay the contractors who were hired to repair your shower leak, but there is still water on the bathroom floor.  Obviously, you are not satisfied with the work they completed, and you don’t want to pay for it.  The problem is, you charged it on a credit card and now the bill has come!

Your first step is to contact the contractor, or the merchant you made your purchase from.  Most of the time, the merchant is more than happy to replace a broken item, perform the service again or refund the purchase back to your credit card.  If you make a phone call, document it and follow up with a letter to cover your tracks in the event the merchant doesn’t follow through.

If for some reason the merchant decides they are not going to do anything to correct the situation, you should immediately contact your credit card company and report the information.  Don’t wait to report the problem on a later date- most credit card companies require you to report a problem as soon as you see it on the statement in order to benefit from any of the protection they provide.

Charges You Didn’t Make

Did you know that federal law is involved in helping limit credit cardholder’s responsibilities for charges on credit cards that they did not make themselves?  The Fair Credit Billing Act actually limits your responsibility to just $50 for any charges you did not authorize.  If you open your credit card bill and find charges not made by you, there is a process you should follow to get it resolved as quickly and painlessly as possible.

Firstly, call the credit card company and explain the charges that were not made by you.  They will give you instructions as to what to do next.

Then, you should take the time to find and review all of your recent credit card statements in case there were other charges that you may have missed. 

The credit card company will most likely ask you to sign a form to confirm that you were not the one who made the charges in dispute.  Don’t use the card while you are disputing charges.

Once you finally get a resolution and get the charges removed, be sure to order your credit report from all of the major credit bureaus in order to make sure that the record has been updated there- because chances are the time it takes to resolve fraudulent charges will have caused late payments on that credit card that may have been reported.

Credit cards are very useful and most of us do rely on them at some stage. With so many available we tend to only look at the balance transfer and purchase rates but there are a lot of hidden charges that you need to be aware of.Balance Transfer Fee - if you plan to start transferring balances to your new card check the fee first. If, for example, the transfer fee is 2.5% then work out how much this will cost you i.e. a transfer of $5000 might cost an additional $125.

Late Fees - credit cards must be repaid on a monthly basis even if it’s only the minimum amount. Many banks now charge a fee if this payment is late. Always check the date your payments are due, make sure you leave enough time for your payment to reach the credit card company and clear from your bank. Depending on your method of payment these times will vary, even payments made from online banking services may take several days to clear. Setting up a direct debit for the minimum card repayment amount each month is the safest way to avoid late fees and charges.

Important - many people are unaware of the clause that exists in some credit card companies term and conditions. If you miss just 1 payment on your card you may find that great 0% deal you just signed up for has been ended prematurely by the credit card company for breach of it’s terms and conditions.

There can be many reasons for missing a payment, a simply mix up at your bank, a postal strike delayed your cheque or you genuinely forgot to make the payment, whatever the reason the credit card company will still turn off your 0% deal.

Over Limit Fees - your card will be sent to you with a specific credit limit. If, through balance transfers and purchases, you go over this limit then a fee may be imposed. You can also find promotional rates turned off for breaking this term and condition.

Not Using Your Card - can you believe that some banks will actually impose a fee if you don’t use your card? So the days of holding a couple of cards with no balances ‘just in case’ you may need them could be nearing an end. Check with the credit card provider before you apply, often this is called a service fee, account fee or dormant fee.

APR Rates Explained - The APR rate (Annual Percentage Rate) of a credit card is very important because it helps you compare the repayment cost of credit cards against one another. Usually, the higher the APR on a credit card, the more you’ll have to repay on any sum of money you have borrowed (assuming that all other things are equal) e.g. a credit card with an APR of 13.9% is going to cost you more than one with an APR of 9.9% over the same period of time.

The APR does not include all the costs of a credit card, for example, late fees or over limit fees, but it tells you about the most important one. If you are looking around for a new credit card you usually want a card with the lowest APR rate possible. This is only one factor to take into account though. A credit card may have a low APR but if carries a service fee, late payment penalties or high cash withdrawal fees then this may effect how much you are being charged overall.

Credit scores are designed to measure the risk of default by taking into account various factors in a person’s financial history. Credit scoring is often used in determining prices for auto and homeowner insurance as well. Lenders, such as banks and credit card companies, use credit scores to evaluate the potential risk posed by lending money to consumers and to mitigate losses due to bad debt. Using credit scores, lenders determine who qualifies for a loan, at what interest rate, and to what credit limits.

In the United States, a credit score is a number that is based on a statistical analysis of a person’s credit report, and is used to represent the creditworthiness of that person–the likelihood that the person will pay his or her debts. In the case of insurance companies, the likelihood that the person will pay his or her debts directly correlates with their likelihood of filing a claim against their insurance policy. People with lower credit scores have a greater history of filing claims according to an overwhelming amount of research and statistics done over the past 15 years or so.

The theory is that when times are tough smaller less relevant claims are now getting submitted to the insurance company, also claims are padded to look bigger so people can get a little extra cash from their company. A credit score is primarily based on credit report information, typically from the three major credit bureaus. Although the Fair Isaac Corporation develops these credit score versions for the different agencies (known as FICO scores), they are different numbers, and are periodically updated to reflect current consumer loan repayment rates. Recently, some of the agencies that generate credit scores have also been generating more specialized insurance scores, which insurance companies then use to rate the quality of potential customers as I mentioned before.

Understanding your credit score is the first step to improving it and making it work in your favor instead of against you. With an improved credit score, lower expenses,proper asset and identity protection, and maybe some extra income on the side; all of which I will discuss in future posts, you can eliminate your debt completely in a few years (not a joke) and live a less stressful life. Here are some tips on improving your credit score relatively quickly:

Payment History - Your monthly bills consist of expenses and debt. The debt is loans such as credit cards, car payments, mortgages, etc. You must make sure your debt is paid on time every month. Any history of late payments (including missed payments and derogatory payment statuses) is a negative factor. No reported history of payments on any account is also negative because lenders cannot tell whether you paid on time or were late. Some cases of late payments are worse than others. If you have not been late with any payments recently, lenders may think you are responsible and do not (or will no longer) miss payments. Lenders realize that many people occasionally pay late. Therefore, being late with a single payment is typically not as harmful as being late with two or more consecutive payments. Similarly, being late on many accounts is typically worse than being late on one. Also, lenders may view late payments as a more serious problem if you have collection accounts or negative public records such as bankruptcies or court judgments. These types of credit records indicate a pattern of credit problems.

Debt To Credit Limit Ratio - Having accounts with a high credit limit or loan amount is a positive factor, because it indicates to a lender that other lenders have trusted you with a lot of credit in the past. On the other hand, having accounts with low credit limits or loan amounts is a negative factor. It may suggest that your credit reports contained information that was of concern to lenders at the time they determined your credit limits or loan amounts. Finally, having no accounts with a reported credit limit or loan amount is a negative factor because lenders cannot evaluate how much other lenders have trusted you with credit so far. It might be beneficial to close the lower limit accounts and ask for higher limits on your preferred accounts.

Activity - Having accounts listed in your credit reports is a positive factor because the payment history of these accounts shows lenders how well you pay your bills. Therefore, having too few accounts or too few open accounts may be considered negative. However, having too many accounts or adding new accounts too quickly may also be considered negative because lenders worry that you are spending (or preparing to spend) beyond your means, even if you have never been late with any payments. Note that closing accounts will not change this. Also, if you do not currently have credit, getting your first few credit cards may be difficult and may involve high fees, high interest rates, and low credit limits. Note that accounts from personal finance companies (which specialize in lending to people with credit problems) may be considered negative.

Revolving Credit Balances - High balances are a negative factor because lenders worry that you are living beyond your means and may not be able to repay them. This is particularly true for credit cards. For installment loans such as mortgages and auto loans, lenders often use the proportion of the loan that is still unpaid to judge your ability to take on new debt. If very little of your installment loan balances have been repaid, lenders may not give you more credit that could add to your debt. In general, lenders evaluate how much you owe (your debt) in relation to how much you earn (your income). However, no matter how high your income, having a lot of debt may lower your credit scores because lenders know that adverse changes in your employment and life events such as divorce or illness may make it hard to pay your bills. Low balances, on the other hand, are a positive factor because lenders do not stand to lose as much if you become unable to repay them. However, not using your credit accounts may be considered a negative factor, because it does not provide lenders with information about how you typically use credit and repay your debts.

Applying For Credit - Applying for credit many times within a short period can lower your credit scores. When you apply for any type of credit (such as an auto loan, credit card, department store card, or mortgage), the lender considering your credit application checks your credit history. This is recorded in your credit reports as a “hard inquiry.” Although inquiries are an unavoidable result of applying for credit, lenders dislike seeing many inquiries within a short period (such as 6 months). This is because they cannot tell whether you are “shopping” for the best offer or if you are desperately trying to get credit because of financial trouble. Therefore, try to limit your comparison to a small number of lenders when “shopping” for the best offer.

In summary, it is quite easy to improve your credit score by 30-50 points in just a three month period. This could be difference between paying 25% more or less on your car insurance, or getting a credit card or mortgage with rates of 3-5% higher or lower. These little differences will most definitely affect your ability to get ahead of the game. People that pay more for insurances and have higher interest rates on their loans will never become debt free or get out from under it all.