I usually pay on time, but occasionally I miss the due date by a day or two. Are these exorbitant $35 late fees fair practice?
I'm going to start out on the bank's side on this one. A credit card is a line of credit. The bank commits to loaning you money up to your credit line, and you commit to paying them back. When you don't pay your bill on time, the bank starts to wonder if you're going to pay it at all. By penalizing cardholders for late payment, the bank both trains you to make timely payments and gets periodic affirmation of your commitment to repay them. OK, so nobody likes negative reinforcement, and $35 is a pretty expensive reminder. Especially when a couple of late payments are then used as an excuse to raise the interest rate on your credit card.
What to do? First, call the credit card company. Tell them that you plan to move the account if they don't rescind the late fee. That should work the first time, and it won't the second time. Then ask yourself why you're late with these bills. You may need to organize the due dates to fit your monthly budget flow.
Here are more tips on avoiding late-payment fees.
Can a credit card company continue to charge over-the-limit fees on an outstanding balance of a closed account?
First off, you can't close an account that has an outstanding balance. You can, however, notify the credit card company that you want the account closed to new purchases. Interest charges and fees aren't purchases and can continue to increase the outstanding balance.
Credit card companies have the ability to not authorize purchases that would put your account over its credit limit. So anything that is above your credit limit was either done with their authorization or by interest and fees taking the balance over your limit. Regardless of how the fees got there, they aren't illegal.
The credit card company isn't likely to help you with your problem. You've closed the account to new purchases, so they know they don't have you as a long-term customer. Now, they're just making what money they can off the account before you pay it off or it goes into default.
Considering transferring balancesYou can't afford to not pay down this debt. I'd hate to see you go in to credit counseling for this one debt because of the negative effect it has on your credit report, but you need to find some way to make this stop. I'm going to suggest that you apply for a new credit card and, if successful, transfer the balances away from your current credit card.
First check your credit report. Dispute any erroneous items. Then search for a new credit card on Bankrate. Apply for only one card. All credit applications will show up on your credit report, and multiple applications and denials will hurt your ability to get credit in the future.
You're actually more concerned about the new card's credit line than the interest rate because you need a line big enough to be able to transfer the balance and close the old account, so don't chase a low introductory rate that you won't qualify for. Just being able to put the $35 a month you were paying in fees toward paying down the balance will help out a lot.
Credit counselingIf you can't qualify for a new card, then credit counseling may be your best solution. A credit counselor can negotiate a repayment plan with your creditors and may be able to reduce the interest rate on your debt. They will definitely be able to stop the over-the-limit fees.
Most agencies are nonprofit, but that doesn't mean that they won't charge you a fee to put together a budget and repayment plan.
The National Foundation for Credit Counseling can help you find a credit counselor in your area or even counsel you online. The FTC has a list of questions to ask when meeting with a credit counselor. If you choose to go this route, you should interview two or three credit counseling agencies before signing with one.