Smart Spending: Reducing Credit Card Fees


President Obama has put the credit card industry on notice, pressing executives to make card deals easier to understand and to rein in hikes in fees and interest rates.

The president supports legislation moving through Congress that would speed the implementation of tougher card rules that federal regulators have already set, but which don’t take effect until July 1, 2010.

But card users don’t have to wait. You can take steps right now to minimize or eliminate the effect of sky-high late fees and interest-rate hikes.

Many of the most devilish problems, like over-the-limit charges and blocks on card usage, happen because the card user has simply lost track of account balances and due dates, or because a card bill came late or a payment that was sent on time was delayed in the mail.

The computer-savvy card user can avoid all that with online account access, which is offered by most card issuers. Account balances, recent transactions and payment due dates are all visible online.

If you use a credit card issued by the bank that also has your checking account, you can make monthly payments online, virtually instantaneously, avoiding the delays of ordinary mail.

Many card issuers now allow customers to set up automatic online payments to be made on scheduled dates, drawing from linked checking accounts. These advance payments are especially useful if you’ll be traveling. Make the automatic payments large enough for the minimum required to avoid late fees. In addition, don’t’ make a habit of only paying the minimum, as that can cost you a fortune in interest over the years. To get a better idea, use the Minimum Credit Card Payment and the Payoff Credit Card calculators at

Many card issuers go a step further to help customers keep on top of things. Wachovia (Stock Quote: WFC), for example, offers a service that can be set up to automatically send you an email when your card balance hits a level you’ve designated.

It can also notify you that the payment due date is coming up, or that your balance is within a given range of your limit.

Almost all card companies also allow customers to check balances, payment due dates and recent transactions by phone.

Of course, all these tasks can be handled the low-tech way as well. You can keep a piece of paper in your wallet with a running tally of charges, and payment due dates can be marked on a calendar.

Computerized calendars, like the one in Microsoft Outlook (Stock Quote: MSFT), can be set to remind you of the monthly payment date.

In the end, confusion is to blame for a lot of card holder problems, such as missed payments. You can reduce this by using fewer cards and by getting rid of those with the highest interest rates or annual fees.

Finally, instead of credit cards, use a debit card whenever you can. It will draw on your checking account, so there will be no risk of late fees or interest-rate hikes.

But because it does make sense to have a credit card or two, use the shopping tool to make sure you’ve got the best deal.

Related Stories:

•    How to Avoid the Credit Card Interest Trap
•    Credit Cards Hike Rates Ahead of New Regulations
•    Use Transfers to Cut Credit Card Interest

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at

Show Comments

Back to Top