The Cost of Late Fees (Part 2)
In part one, I discussed my bad and expensive habit of incurring late fees. I have been disciplined enough to have never had to pay a late fee for credit cards, etc. How did I get so disciplined? I got my first credit card at 17, I signed up for the card at a pro basketball game. Since I wasnt 18, I pushed my age back a year. My friend who was a few years older than me signed up at the same time. We had no credit; we both had part time jobs and what little income we had flocculated. Nevertheless, we got our credit cards with $1000 limits in the mail a few weeks later. In the beginning, I was good. I paid my credit card in full when it was due. A few months later, my friend and I were discussing the credit cards, she said, do you know if you dont pay the minimum they charge you if youre late? And then they charge you if youre over the limit? At the time the fees were only $15 for each offense, now they average about $30. That was enough to scare me straight! Since then, I always made sure to pay at least the minimum, which has enabled me to have good credit when some of my friends didnt.
If you dont pay at least the minimum youre teetering on the edge of whirlwind of trouble. If youre late for 30 days or more, you can be reported to the credit bureaus, making a dent on your credit score. If you dont pay your credit cards on time, you might jeopardize your good standing and if you do that, then other lenders (even lenders who youve always paid on time) can jack up your interest rate! Yipes. When I was out of work for several months in 2001 and 2002, I called my credit card company and explained my situation to them. Because I had a history of paying my credit card on time, they waived my minimum payment for two months. I think the fact that I was forthcoming and contacted them before the payment was due; they were willing to work with me. In the end, my credit card company just wants to get paid, and they are often more flexible as long as you make attempts to pay. For more tips on dealing with credit card companies click here. Here's an intresting article on credit card companies, it's geared toward college students, but anyone can benefit from the information. If you want to know how long it's going to take to pay off your credit card, click here.
This is also posted at Financial Freedom Trek.
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Credit cards are just so bad. If I could go back in time 10 years and give myself one piece of advice it would be to not get any credit cards. Except for maybe an American Express or something that you HAVE to pay off every month. If I didn't have this crushing debt to pay off right now on credit cards we'd be doing incredible right now. I get paid twice a month and just realized that we are using 1 of my entire paychecks just to for debt payoff. Ugh!
Thanks for commenting on my post. I agree credit cards can be a very bad thing. Since most of use have had no real financial education in school . . . it has been especially difficult learning how to use them properly. It took me several years to get it right. However, I am very grateful that I had credit cards and could use them when I was unemployed for six months (in late 2001 and early 2002) and just temping to get by. I don't know what I would have done without them. In a future post I will write about how I dug myself out of debt. Keep on paying it down, you can do it!
Sadi
