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No-Fee Credit Cards Are the Latest Industry Trend

[Thursday, March 10th, 2016]

There’s good news for folks who chronically pay their bills late. Late payment fees are on their way out, according to recent trends in the credit card industry.

More credit card companies are doing away with common penalty fees like late fees and over-the-limit fees. This is in part due to the Credit CARD Act of 2009—that’s the Credit Card Accountability Responsibility and Disclosure Act, which gave consumers more rights and fundamentally changed the practices of many credit card issuers. It also made it easier for folks to track their credit score, giving them greater free access to credit report information.

Late fees, which are commonly in the $35 range, are becoming a thing of the past. However, some cards only waive the fee for the first late payment; after that, they may charge for a tardy payment. Over-the-limit fees, which are charged when a cardholder accidentally charges a purchase that puts their balance over their credit limit, are also typically around $35 each. These too are becoming less common, say credit card experts.

Late payments are common, but not necessary

Polls have found that paying credit cards late is a common problem for busy adults who may be juggling a family, a job, and other responsibilities. Taking a vacation or another such disruption in routine is one reason many people lose track of their amount due and payment date due, and may miss a payment.

However, there is little reason for people to pay their bills late these days, according to financial advisors. With the advent of text message reminders, email reminders, automatic payments, and so many different banking mobile apps available, it’s easy for folks to set up alerts and automatic debits to pay their credit card bills.

Since late payments are also one of the number one reasons for a low credit score, it’s even more important for folks to set these alerts up and make sure they are paying their bills on time. Payment history counts for 30% of a consumer’s credit score, so paying by the due date is a good way to ensure a good credit score.

The plethora of new no-fee credit cards on the market should not fool people into thinking it’s no big deal if they miss a payment or go over their credit limit. Both of these things can still impact credit scores, even if they don’t mean being charged a fee.

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