Sure, you might want a picture of your adorable dog on your credit card, or maybe that adorable photo of you and your fiancé on vacation, but is it worth the money?
If you have great credit and are already paying off your credit card balances in full every month, that extra expenditure (nominal, to be sure) can make perfect sense if it makes you happy each time you pull your card out of your wallet.
But what if you’re thinking about personalizing that secured card you just got to improve your credit? Or what about other charges that you may or may not know you’re opting into? Some of these add-ons and upcharges offered by credit card companies might be best to avoid. Here are five credit card add-ons and how you can keep from being charged for them.
1. Express Pay Option
Some credit card issuers offer this service for an extra fee.Essentially, by giving the issuer an extra $10 or so along with your monthly payment, you’re paying to have access to an increased available credit limit more quickly (one business day versus three or four business days after you make a payment).
As with many of these kinds of offers, it’s a revenue generator for credit card issuers, particularly those who service cardholders with subprime credit.
“You see more of that stuff in the subprime world because they don’t have the same sort of revenue capability that some of the other card issuers do,” said Thomas Nietzsche, a credit educator with ClearPoint Credit Counseling Solutions. “Those lower credit limit cards really have to be creative with how they make money.”
Instead of paying extra to make sure you have access to a larger available balance more quickly, you may want to try paying down as much of your balance each month as you can. Putting that extra $10 toward your balance is generally a far better use of the money than is making sure you can access more of your credit limit a few days sooner.
2. Credit Card Insurance
This option isn’t as heavily pushed by card issuers as it was many years ago, due in part to some legal actions that found credit card insurance coverages to be questionable at best.
Most debt protection plans are expensive and confusing. They cost money in direct upfront payments, and even when they do pay out, they cost extra money in deferred interest payments. Besides, each plan has its own loopholes and exclusions that the issuer can sometimes use to avoid paying any benefit at all. The solution in most cases is to not sign up in the first place.
“There have been cases where the company the creditor was contracting with wasn’t actually providing any services at all,” Nietzsche said.
If you have high credit card debt, or you worry you may soon experience a big drop in income, you may decide that a debt protection plan is right for you. If so, get and read the terms of the insurance yourself. Make sure that it covers a job loss or medical problem you might actually experience.
And if you do it, you’d better be expecting calamity sometime soon. Paying $3,000 for a paltry $10,000 in maximum benefits shows just how quickly the expense of these products can stack up. The sooner the disaster, the bigger the financial payoff for the consumer.
3. Adding an Authorized User
Most credit cards will allow cardholders to add authorized users at no additional charge, but some high-end rewards cards charge a fee for each additional cardholder. The ability to add an authorized cardholder is a nice benefit to have, but it is not without risk. By understanding the advantages and liabilities, cardholders can more wisely consider granting another person access to their line of credit.
4. Receiving Paper Statements
Some issuers charge $1 to send paper statements, and it’s not always clear that you’re being charged for this “extra” until it shows up on your statement. To avoid this upcharge, ask the company directly if they charge for paper statements, or forgo receiving them altogether. And always check your statement for charges like this, as well as fraudulent or erroneous charges.
One of the most important things you can do when it comes to your credit cards is to monitor how your payment history and credit utilization are impacting your credit scores. A poor credit score can be downright expensive — potentially tens of thousands of dollars over the course of a lifetime. (We even made a calculator so you can see just how much you’re losing to bad credit.)
You can track how your credit card balances and payment history are impacting your credit by getting your two free credit scores, updated monthly, on Credit.com.
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