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How to battle credit card fees

Gerri Willis explains the ins and outs of those little credit card extras that can leave you in the hole.

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By Gerri Willis, CNN

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NEW YORK (CNNMoney.com) -- Congress is holding hearings on legislation that aims to reform credit card industry abuses. While consumers may not see protections anytime soon, here are some top tips on how you can fight back now against credit card fees.

Watch your interest rate

Credit card companies reserve the right to change your interest rate at any time and for any reason.

If you make a late payment or go over your limit, your credit card interest rate could skyrocket to over 32%. And despite the recent spate of Federal Reserve cuts, some of the more popular cards have barely budged with their variable rates according to Bill Hardekopf of Lowcards.com.

Pay attention to your mail and notices from your credit card company. You may be mailed a notice of a rate increase and being given the choice to either close the account, or keep the card with the increased rate.

You'll have to write an opt-out letter if you want to close the account. Keep in mind, there is no opt-out form, you have to write your own letter.

"Be sure to send it by certified mail," says Hardekopf. If your opt-out letter is not received, your credit card company may automatically increase the rate.

If your rate increases, call and ask for a lower rate. If you have a good credit score and good payment history, don't accept the rate increase. You can negotiate.

If they don't lower your rate, then it is time to comparison shop to find a lower rate card.

You may also want to check your credit report. It is possible that your rate increased because your credit score dropped. Look for errors that should be corrected, or changes that you can make to improve your score.

Be wary of late fees

If you make a late payment you're usually charged a penalty that can be $35, not to mention your interest rate could increase.

Right now, credit card companies are allowed to mail billing statements out two weeks before the statement is due. That means you need to send in your payment - stat. Sometimes companies even specify to the hour when a payment must be received in order to avoid late charges.

Make sure you follow the guidelines for late payments clearly. If you find that you just put your billing statements aside and forget about them, it may be worth your while to automate your payments. You can sign up for these services on your credit card's web site.

Of course, since your credit card bills vary, you'll want to keep a close eye on how much money you have in your checking account. And if you find that you really need a last-minute fix, you may be able to pay by phone. Keep in mind you may be charged a few dollars, but it's better than the alternative.

Be aware of the gotchas

As I mentioned, rates, fees and terms of your credit card may change.

Your minimum payment due may increase according to Lowcards.com. For the most part your minimum payment due is 2%-2.5% of your balance. But that could be raised to 4% in some cases. And while transferring a high credit card balance to a card with lower rates can be a great move, it's becoming more and more expensive.

It used to be that balance-transfer fees were capped at $75 or so. But more often credit card companies are getting rid of caps on balance transfer fees or increasing the fees, says Arnold of CardRatings.com.

The other pitfall with balance transfer fees is that you'll only get that introductory rate on the amount you transfer.

"If you make more purchases on the card, you'll be hit with a higher ongoing interest rate," says Hardekopf. And sometimes you may get service fees for redeeming your credit card rewards.

"This $25 fee could be quite a surprise for people looking forward to their free airline ticket," he says. To top of page

Gerri's Mailbox: Got questions about your money? We want to hear them! Send e-mails to toptips@cnn.com or click here - each week, we'll answer questions on CNN, Headline News and CNNMoney.com.
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