Credit cards without late fees? At a time when shrinking grace periods are making it easier to get hit with late fees, ads promoting no-late-fee cards are tempting. The cards, which also carry no annual fees, can save you as much as $39 for each late payment. But as you might expect, most of the cards won't let you miss the deadlines with impunity for long.
Repeatedly miss the payment deadlines with the American Express Clear card or Citibank's Simplicity card and you could find your 0 percent introductory interest rate rocket to nearly 30 percent or more. (Citi also eliminates the no-late-fee benefit during any billing period in which the customer doesn't use the card.)
And if your payment arrives more than 30 days late, any of the cards may report your transgression to a credit agency, which could prompt other lenders to jack up their rates on your outstanding debt.
Only with the Visa Platinum Credit Card from Commerce Bank, based in New Jersey, are you safe to make late payments more than once or twice a year without penalty. Unfortunately, that card is available only if you do business with the bank, which has branches from Virginia to Connecticut and, beginning in January 2006, in Florida.
What is most troubling about no-late-fee cards is that not all of the penalties are clearly spelled out in promotions we've seen. And except for the Visa Platinum Credit Card, we're not sure what the big benefit is anyway. Card issuers have traditionally rescinded an occasional late fee for good customers who complain loudly enough.
Curtis Arnold, founder of CardRatings.com, a consumer-education Web site, says the cards may be of some benefit if you occasionally miss a payment deadline. But he says American Express and Citibank are betting that ditching the unpopular late fees will lull you into complacency, resulting in more missed payment deadlines and higher interest rates.
The banks say they are simply responding to cardholder objections to late fees. "We're definitely not encouraging customers to pay late," says Citigroup spokeswoman Janis Tarter.
We think the best approach is to make sure you pay your bill on time every month no matter what credit card you have, even if you're making the minimum payment. If you don't have that kind of discipline, you might opt for a credit card with an automatic bill-payment feature, allowing you to designate an amount for the bank to deduct from your regular checking account every month on the payment deadline. Citibank and American Express both offer that option. Commerce offers it only to cardholders with checking accounts at the bank.
The bottom line: If you want a card that tolerates occasional financial tardiness, the best of the three is the Visa Platinum Credit Card. "Of the three, in terms of late payments and not worrying about potential devastating repercussions, it is the most consumer friendly," Arnold says.
Repeatedly miss the payment deadlines with the American Express Clear card or Citibank's Simplicity card and you could find your 0 percent introductory interest rate rocket to nearly 30 percent or more. (Citi also eliminates the no-late-fee benefit during any billing period in which the customer doesn't use the card.)
And if your payment arrives more than 30 days late, any of the cards may report your transgression to a credit agency, which could prompt other lenders to jack up their rates on your outstanding debt.
Only with the Visa Platinum Credit Card from Commerce Bank, based in New Jersey, are you safe to make late payments more than once or twice a year without penalty. Unfortunately, that card is available only if you do business with the bank, which has branches from Virginia to Connecticut and, beginning in January 2006, in Florida.
What is most troubling about no-late-fee cards is that not all of the penalties are clearly spelled out in promotions we've seen. And except for the Visa Platinum Credit Card, we're not sure what the big benefit is anyway. Card issuers have traditionally rescinded an occasional late fee for good customers who complain loudly enough.
Curtis Arnold, founder of CardRatings.com, a consumer-education Web site, says the cards may be of some benefit if you occasionally miss a payment deadline. But he says American Express and Citibank are betting that ditching the unpopular late fees will lull you into complacency, resulting in more missed payment deadlines and higher interest rates.
The banks say they are simply responding to cardholder objections to late fees. "We're definitely not encouraging customers to pay late," says Citigroup spokeswoman Janis Tarter.
We think the best approach is to make sure you pay your bill on time every month no matter what credit card you have, even if you're making the minimum payment. If you don't have that kind of discipline, you might opt for a credit card with an automatic bill-payment feature, allowing you to designate an amount for the bank to deduct from your regular checking account every month on the payment deadline. Citibank and American Express both offer that option. Commerce offers it only to cardholders with checking accounts at the bank.
The bottom line: If you want a card that tolerates occasional financial tardiness, the best of the three is the Visa Platinum Credit Card. "Of the three, in terms of late payments and not worrying about potential devastating repercussions, it is the most consumer friendly," Arnold says.
Like the American Express card, Commerce's card has a rewards program that gives you points for airline travel, restaurant dining, and more. It also dispenses with all the other annoying fees you're likely to find today, including those for spending over the card's limit, transferring a balance, or taking a cash advance. And if you don't pay your balance in full, Commerce doesn't factor in your new purchases when calculating your finance charges, which is rare.
One caution: While repeated late payments won't send you into the interest-rate doghouse, Commerce eventually may revoke the card if you abuse the privilege.
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One caution: While repeated late payments won't send you into the interest-rate doghouse, Commerce eventually may revoke the card if you abuse the privilege.
For complete Ratings and recommendations on appliances, cars & trucks, electronic gear, and much more, subscribe today and have access to all of ConsumerReports.org.
BACK TO: Credit Card Main
