Five Unnecessary Credit Card Fees You Can Avoid

Credit card companies are in business to make money. They don't run charities for down-on-their-luck consumers, and they don't have access to the Money Fairy who provides them with funds to give their customers. Instead, they make money off fees and finance charges paid by the people who depend on them. Of course, this makes credit card companies sound evil, which they are not.

However, you can find yourself going broke over credit card fees, particularly when you don't know how they work. When your statement comes in the mail, you might find yourself unpleasantly surprised by the total owed, which is to be avoided wherever possible.

Following are five credit card fees you can avoid if you practice due diligence in maintaining your accounts.

1. Late Fees

If your credit card payment isn't sent and posted by the due date, you will be charged a late fee, which in some cases can be up to $39, depending on your balance owed. Late fees not only cost you in the present, but they can also be ammunition for the credit card provider to raise your interest rate and increase your finance charges.

To avoid late fees, you can sign up for electronic alerts with most credit card companies. Six or seven days before you minimum payment is due, they will send you an e-mail reminder. It gives you sufficient time to post a payment and can save you plenty of money in the process. You can also sign up for automatic payments with some accounts, which are withdrawn directly from your checking account.

2. Over-the-Limit Fees

When the balance on your credit card exceeds your credit limit on the account, you will be charged an over-the-limit fee. This can happen if your forget about interest charges on your purchases, or if you forget how much you've already charged during a billing period. Unfortunately, most credit card companies will allow you to go over your limit without declining the card, ostensibly to collect the over-the-limit fees.

If you want to avoid this scenario, you can request that purchases that exceed your limit be denied. Some financial institutions-such as WaMu and Bank of America-allow this to help protect their customers. Overdraft protection is another option, but fees are usually associated with this service as well.

3. Balance-Transfer Fees

Another credit card fee to avoid is the balance-transfer fee. In addition to charging interest on the amount you transfer, your credit card will also be charged a fee under most accounts. The amount varies from 1% to 3% of the total amount, though it is usually capped at around $75. Unfortunately, these fees can also put you over your credit limit (see above).

To avoid balance-transfer fees, find a card that doesn't charge them. Although they are few and far between, some cards have special balance transfer rates for an introductory period, and you can consolidate your debt without incurring any fees.

4. Foreign Conversion Fees

When you use your credit card in another country, the credit card issuer (Visa, MasterCard, etc.) will charge you a foreign conversation fee, which is usually around one percent of the total purchase price. In addition to that, your financial institution will charge you another fee (between two and three percent) to add insult to injury.

Some credit cards, such as the Discover More card and a few Capital One cards, don't charge foreign conversion fees. Apply for one of these and use it exclusively while out of the country to avoid these enormous credit card fees.

5. Payment Fees

A growing trend among credit card companies is the push for customers to pay online. With many companies, you get charged a fee ($3-20) if you insist on paying by telephone. The fee will be charged to your account and payable on the next billing cycle.

If this is the case for you, avoid the fees by signing up for an online account and paying over the Internet. This is easier-no hold times-and you won't be charged extra for the convenience.

Source: Credit & Debit Cards

CVV2 Credit Card Scam: What You Should Know

Because credit card fraud is becoming such a hot issue for consumers, many merchants who accept credit card payments are beefing up their security. Some ask for your billing zip code to verify that your credit card is valid, while others ask for the CVV2 number-or security number-on the back of your card.

MasterCard, Visa, AmEx and Discover cards usually have a CVV2 number, which is usually two or three digits printed on the back of the card, near your signature. This code is unique to your card and is placed in the system with your credit card number, and is one of the safest ways to verify who you are and that you actually have the card. This way, even if a scam artist has stolen your account number, they can't necessarily use it for "card not present" transactions.

The CVV2 credit card scam began several months ago, and is increasing in frequency as more fraudulent users determine that this is the only way to effectively use stolen information. If they can input the CVV2 number online or over the phone, they have access to your entire available credit.

How the Scam Works

This credit card scam is quite ingenious, particularly for consumers who don't bother to verify callers when they answer the phone. The scam artist calls to inform the consumer that a charge on their credit card is suspected to be fraudulent. They'll ask if you purchased a $750 digital camera or a 2002 Ford Explorer-something that you probably didn't purchase.

When you exclaim that of course you didn't buy a $2,000 washing machine, they'll offer to return the money immediately if you can answer a few security questions. This is how an actual credit card company representative would handle the situation, so it sounds legitimate. They might ask you to verify a previous address or give your mother's maiden name. Even if they don't have that information, they'll agree with whatever you say.

The last question they'll ask is to verify the CVV2 number on the back of your credit card to verify that you have it in your possession. Without thinking, you whip out the card and read off the number, and the scam is successful. Then they thank you for your time, assure you that the fraudulent charge will be removed, and hang up the phone.

Why the Scam Works

The CVV2 credit card scam works because consumers simply don't pay enough attention. They assume that if someone calls claiming to be from the bank, it must be true. These people usually have professional voices and seem to know what they're talking about, and they'll thank you for using Washington Mutual or try to sell you the Privacy Protection for your account.

This scam is similar to the e-mails that have circulated from financial institutions and PayPal. Consumers click on the links to update their account information or change their passwords, only to fall victim to a scam in the process. The CVV2 credit card scam is incredibly dangerous, which means you need to know how to protect yourself as a consumer.

How to Avoid Being a Victim

If someone calls from your bank, ask for the number so you can call back and verify. In addition, you should call the normal 800 number to ask if the number given is actually one of your bank's official lines. If it isn't, you'll know that you were almost duped.

Whatever you do, never give out personal or identifying information over the telephone, such as your social security number or the CVV2 number. Legitimate banking officials won't ask for this information over the phone line unless you have called them specifically.

Want to protect your credit card information? Don't give out your CVV2 number!