The One-Two Punch of Holiday Bills and Tax Time
Feb. 1, 2006 — -- Right now, many Americans are facing a financial one-two punch with high holiday credit card bills and higher heating costs. And here's another blow: Tax time is coming. Don't worry, here are some simple tips to help you start saving money now.
While most credit cards have a grace period, often missing just one period can send your interest rate soaring by as much as 25 percent. Add that to the late payment fee, which averages $29 but can go as far as $39 depending on your balance, and suddenly your credit card debt can get much worse.
Even if you can't pay the minimum, send in what you can on time. You'll avoid the late fee and prevent the card company from automatically raising your interest rate.
Make sure you know your company's card policy so that your payments arrive before the company's deadline.
Also, transferring your balances to zero-percent cards may not be smart saving. The zero-percent rate cards will be relentless if you miss or skip a payment, often sending the zero percent rate soaring to nearly 30 percent. And once you clear your transferred balance, watch out! The interest rate will definitely move skyward after the payment period expires.
For example, if you are due a refund of $1,200 and you go to a company that offers rapid refunds. You would likely pay a $29.95 fee for the loan, plus a $45 finance chage, plus a minimum fee of $50 for doing your taxes. So you would be paying at least $125 in fees, reducing your refund to $1,075.
If you file electronically using the free filing alliance and direct deposit, you can get the full amount of your refund in about two weeks.
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