It is sometimes hard to figure out just how much you are paying for financial products and services. By law, financial firms are obliged to tell you what their fees and commission are for your credit card loan, buying and selling stock, arranging a mortgage. But the financial industry is rife with hidden expenses that are not disclosed to their customers.
However one area of clarity is credit card fees. Store-branded cards charge on average far more than general purpose credit cards, such as Visa and Mastercard. In a 2017 survey of the 100 largest retailers, CreditCards.com found that the difference was seven percentage points. While store credit cards carried on average an annual percentage rate (APR) of 25 percent, the rate for general purpose credit cards was only 16 percent.
Both are unnecessary expenses. Only 30 percent of credit card users pay off the full balance each month. That’s where the credit card companies make their high profits. Those who manage to pay off their credit balances each month are rewarded with strong credit scores — and the ability to borrow more at low interest rates. But 42 percent of credit card users maintain a revolving balance each month. (The remaining 28 percent are dormant accounts.)
The easy way to ensure monthly onetime payments is to have the credit card company debit your bank account automatically each month. You have to be sure that you have sufficient balances to cover the charges but you can set up text message reminders to advise you when payments are about to made.
One other bonus – one of the key factors for your credit score is timely payment of bills. Setting up automatic payments can do wonders to build that always important credit score.