How to Prevent High Rates and Hidden Fees when Applying for a Loan

Your average loan and credit card often include exorbitant fees compared to standard options for borrowing. We look at simple ways to avoid unnecessary costs and unfair rates.

Late Payment Penalties

Missing or delaying a payment on a loan or a credit card could leave with a hefty charge. This also negatively influences your credit rating compromising your ability to seek loan approval or increased credit at a later stage.

The costs for late payments average £12. To avoid the unnecessary costs and credit implications, create debit orders for scheduled payments.

Avoid Exceeding Your Credit LimitAvoid Exceeding Your Credit Limit

Do not go over the credit limit on your credit card or you will suffer a charge.

It can cost up to £12.

A simple balance check will help you remain up to date of where your credit is and how to monitor your expenses. Most vendors allow you to check credit card balances by phone or online.

Fee for Returned Payments

Companies issuing a payment for a direct debit to your credit card will charge a penalty if there is insufficient credit to cover the cost. A fee for returned payments will be issued in such instances.

The charge can cost from £5 to £12. By ensuring you have enough credit, you can avoid such penalties.

Withdrawing Cash From a Machine with a Credit Card

You can be charged up to £3 per transaction that is performed at a machine. This charge consists of a percentage fee with added interest including a fee for the actual withdrawal. If you pay with your credit card, your transactions with the specific period are generally free when paid on time on a monthly basis.

It is best to minimize or avoid the use of a credit card to settle your regular or monthly costs. For scheduled payments of utilities, consult with the relevant companies about an alternative financial arrangement.

Dormant Credit Card Penalties>Dormant Credit Card Penalties

If you do not use your credit card within a specific period, you get charged a dormancy fee. According to the most common credit card companies, you could be charged up to £20. It is important to ensure that you have either signed with a credit provider that does not charge penalty fees or you cancel the credit card that is not in use.

Charges for Paying with a Credit Card

While you may find credit card companies offering free transactions for a limited number of purchases, many companies charge with each purchase to your card. You may not always be aware of these charges and most credit card owners only notice the higher rates upon closing.

Upon purchasing tickets for a flight online, you may not be able to compare rates. After the purchase is completed, you receive a charge of up to £3 on the transaction.

It is best to limit purchases of under £100 to a debit card and over this amount, to a credit card. It is certainly more economical and prevents unnecessary extras.

International Credit Card Payments

Using your credit card for international payments can prove exorbitant. Your bank will add a loading fee to your card to cover the exchange rate. Upon the addition of the loading fee, the exchange rate will be higher and the payment increased. Withdrawals for cash will be too high. Loading fees do not always show up on statements so be sure to check your statements and T&C’s to learn of loading fees.

Unjust Credit Card Charges

In 2006, a ruling issued by the Office of Fair Trading indicated that charges for extending payments beyond your credit limit and late payment fees reaching £35 and more were deemed unfair.

Consider reclaiming what you have been charged above the £12 mark.

Reducing Your Loan Charges

To ensure you can afford your credit card and loan, it is important to learn of ways to manage the costs. Consult with an authorized provider and professional financial agent to learn how to overcome exorbitant rates.

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