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Line of Credit Fees

Interest is not the only thing that you may have to pay on a line of credit. Many lenders charge line of credit fees that can greatly increase the cost of a line of credit.

Always be careful when opening a new line of credit or using an existing line of credit because of the fees lenders can hit you with. Line of credit fees can quickly add up and make your borrowing a lot more expensive than it needs to be.

Everyone who uses a line of credit needs to be on the lookout for line of credit fees. Hidden line of credit fees can cost borrowers a fortune.

Examples of Line of Credit Fees

Many lenders including banks and online lenders make a lot of money out of line of credit fees. The lenders are always thinking up new line of credit fees to hit you with. This means you should always read your line of credit contract to make sure you won’t obligate yourself to pay excessive line of credit fees.

The most common fee is the late fee the line of credit lender will hit you with if your payment is late. Some lenders will start charging late fees if your payment is one minute late. You can avoid late fees by making electronic payments which won’t get lost or delayed in the mail.

There are also handling and other fees the lender sticks on. These maybe quite small but they do add up. A $10 monthly fee adds up to a $120 a dollar extra charge on your line of credit.

Some lenders will try to get you to pay credit insurance which covers their losses if you don’t pay. This is a good deal for the lender but a lousy deal for you. If you pay off your line of credit you will lose money on credit insurance. Credit insurance maybe labeled protection or a protection plan. Don’t be fooled the only one getting protected is the lender.

Read Your Line of Credit Agreement

The best way to avoid unnecessary line of credit fees is read all of the line of credit agreement. Pay special attention to the fine print because that’s the main place lenders will try to stick hidden fees.

If you spot any sort of fee in the line of credit agreement that you don’t want or understand question it. Always question the fee before you take out the line of credit. If the lender can’t come up with a good explanation for the fee tell them you won’t sign the agreement until the fee is taken out.

Lenders want your business so they might take the fee out. If they don’t there are lots of other lenders out. Remember it doesn’t hurt to ask and to exercise your rights as a customer.

Line of Credit Fees after the Fact

Always read the bills the line of credit lender sends you to see what you’re being charged. It’s a good idea to use a calculator to figure out what your payments should be. The payment should be a percentage of the balance you owe on the line of credit plus the interest. If it’s more than that you might be paying a hidden fee.

Line of credit bills may also list fees on them. If you see a fee you didn’t know about on a line of credit payment coupon ask your lender about it. It may be possible to get a fee taken off and reduce your payment.