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2007
More credit cards hidden fees
Friday May 1, 2009
There are various fees attached to credit cards and their usage, most of these we know, but there are some that are harder to pick up.
For example, did you know that you will be charged a ';handling fee' whenever you repay some of your credit cards debt?
A payment handling fee ranges from $1.50 to 50 cents depending on if you pay using Australia Post or through BPAY via the internet or phone. While not all financial institutions are charging their customers this particular fee, it is important to note that according to the Reserve Bank of Australia credit cards fees have climbed 170% over the past five years.
So why do some issuers charge this payment handling fee while others do not? In terms of BPAY, the fee comes from the actual charge that BPAY puts on the credit cards provider as payment for their service, which will be passed onto the merchant and onto the credit cards holder.
For most cases, the actual customer will not have to pay this fee as the credit card issuer will take it on in the cost of the credit card fee. However, sometimes the BPAY fee is not taken on by the credit card issuer and as a result the credit cards user receives it.
Using BPAY to pay bills online is one of the most convenient methods and ideal for many people. However there are some cases where, depending on the merchant involved, paying a bill by BPAY can actually be treated as a cash advance rather than a purchase.
What this means is that there are no interest free days attached to the repayment of that bill and there is a much higher interest rate attached than would apply to a regular purchase. What's more, this can be particularly financially damaging if you are on an introductory offer with a substantial difference in what rates apply.
Why this occurs is that the merchant may have chosen not to absorb the BPAY fee charged by your credit card issuer. As a result, the issuer will allocate money so the BPAY credit cards payment will actually be processed as cash advances, attracting the higher rates.
To ensure that you are getting the very best credit card deal for you, compare credit cards here
