Not sure if this little story from Yahoo has been posted, but I couldn't find it here and wanted to share. Just amazing to think that people are being punished for being responsible! They can really get you coming and going...
"Paying Off Your Credit Card Balance Each Month May Actually Cost You"
If you are one of the 36% of all cardholders who pay off your entire balance on time each month to avoid finance charges, you may soon be penalized. For Instance GE Rewards MasterCard holders who pay off their balances each month are charged an annual $25 penalty fee. Industry analysts predict that more credit card issuers will follow GE's lead.
Why are credit card companies doing this? Because 75% of their revenues come from finance charges, and conscientious users who pay their balances in full each month are in effect using the cards for free. This can be extremely unprofitable for credit card companies.
Some credit card companies are imposing penalties that affect all customers, including:
* Eliminating the 30-day interest-free grace period following a purchase.
* Charging an over-limit fee if you exceed your credit limit by as little as $1, even if your purchase has been approved over the phone by the store.
* Imposing a late fee of up to $20 if you miss your monthly payment date by one to three days.
* Increasing your finance charge if you don't pay on time twice in one year. Some punitive finance rates range from 24.9% to as high as 32.6%.
"Paying Off Your Credit Card Balance Each Month May Actually Cost You"
If you are one of the 36% of all cardholders who pay off your entire balance on time each month to avoid finance charges, you may soon be penalized. For Instance GE Rewards MasterCard holders who pay off their balances each month are charged an annual $25 penalty fee. Industry analysts predict that more credit card issuers will follow GE's lead.
Why are credit card companies doing this? Because 75% of their revenues come from finance charges, and conscientious users who pay their balances in full each month are in effect using the cards for free. This can be extremely unprofitable for credit card companies.
Some credit card companies are imposing penalties that affect all customers, including:
* Eliminating the 30-day interest-free grace period following a purchase.
* Charging an over-limit fee if you exceed your credit limit by as little as $1, even if your purchase has been approved over the phone by the store.
* Imposing a late fee of up to $20 if you miss your monthly payment date by one to three days.
* Increasing your finance charge if you don't pay on time twice in one year. Some punitive finance rates range from 24.9% to as high as 32.6%.
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