Credit cards With No Late fee
The typical American home now has 19 different credit and debit cards and carries a account balance of almost $10,000. This is a shame; rather than saving money, we are giving our savings to the bank card companies in the form of interest. With minimum credit card payments having recently doubled and more restrictive bankruptcy laws in place, we’re more likely than ever to pay late. And when we pay too late, the large additional fees assessed by the charge card corporations kick in. It doesn’t take too a lot of $39 penalties to stir us up; no one likes to pay late fees.
A few banks, as well as American Express, have recently launched new credit cards that claim to offer no late fees. Is this really true? Can they help? How can they really offer no additional fees?
American Express has introduced its Clear card, which is currently available for test marketing from their Website. The card offers no additional fees. And Citibank has brought out its Simplicity card, which offers no annual fee, a zero percent promotional rate and no additional fees provided that you make a purchase every month.
Additional fees are really the only way that banks have to make sure you pay. If there is not a penalty for paying late, why pay punctually?
Well, there’s no such thing as a free lunch, as the old saying goes. American Express says that there are no late charges. And that’s true – mostly. The terms and conditions in their terms of service says that if you should make late payments twice in a year, your rate of interest can be greater to as much as 29%.
Citibank’s terms for their Simplicity card do mention that there are no additional fees if the card is used monthly. That is true, but if you make a late payment and neglect to use the card through the billing period, the usual additional fees of up to $39 apply. Worse, even if you do use the card during the billing cycle, Citibank can raise the rate of interest on your card if you make a late payment. The latest “default rate” for such late payments is the prime rate plus up to 23.99%. With the prime rate currently at 3.25%, that means that you won’t be assessed a penalty for paying late, but your interest rate could possibly climb to more than 27% per year!
If you pay on time and never make a late payment, these no-fee credit cards may be a great thing. For most individuals, who occasionally pay too late, a traditional card with a penalty fee may be a more suitable option. True, paying the fee is a annoyance, but the amount is a trifle compared to the hundreds or even thousands of extra dollars you’ll pay over the next few years because of the higher interest rates triggered by late payments.
Your loan company will not give you something for nothing. If you pay too late, it will cost you money, one way or another.
