Financial Frights

On Oct. 31, miniature princesses, superheroes, and last-minute hobos will knock on your door seeking treats. But year-round, financial vampires are stalking in various forms. Are there fang marks on your wallet?

1. Ghosts of bills past
Everyone from your cell phone provider to your sprinkler guy to your local librarian likes to be paid on time. Those few dollars in late fees may not seem like much, but they can sure take a bite out of your borrowing power if you're a frequent offender. Many service providers sic collection agencies on deadbeat bill payers. And a collection action can turn up on your credit report, marring your ability to get a loan for a mortgage, car, or credit card, and possibly a loaner copy of the latest Grisham thriller. (To make sure there aren't any scars on your credit record, visit our Credit Center.)

2. Credit card curses
You name it -- overdrafts, "convenience" checks, talking to a human customer service rep --- and your lender has found a way to charge you for it. Fees are one of the lending industry's biggest sources of revenue -- up more than 300% in less than a decade. Just last year late penalties increased 5.5%, with many lenders charging in excess of $35 for one payment blunder.

It's not just the late fee that'll leave you hurting. One such misstep, and you can kiss your low interest rate goodbye. The majority of credit card issuers hike the interest rate when a customer is late with a payment. Been lazy about paying someone else on time? Big Brother will know. And he can legally raise your interest rate based on your payment record with some other creditor.

If you aren't a frequent offender, ask the lender to forgive a one-time gaffe. If you don't get the answer you want, threaten to take your business elsewhere, and follow through if necessary. (If you're in the market for a Foolish credit card, click here.)

3. Festering 401(k) fees
A little-known fact about 401(k) plans is that, like every other financial service, the provider charges administrative fees. These costs used to be assumed by employers, but more are being shifted to plan participants -- even ones who no longer work at the company.

If you have money sitting in a former employer's retirement plan, move it into a self-directed IRA. Doing so will give you more investment options at a lower cost. (Visit our IRA Center for more about taking control of money in a former employer's retirement plan.)

4. Investing foes
Opening an IRA, however, won't insulate you from fees. Many brokerage houses charge an account maintenance fee if you fail to transact (conduct an online stock trade or add money to your account). Shop around. Not all brokers are out for blood. (Visit our Discount Broker Center for more on getting the most brokerage for your buck.)

5. Financing frights
File this one under the "if it sounds too good to be true, you're not reading the fine print" file. Before you go for a 0% financing/no-money down deal, shop around and do the math, factoring in rebates, down payments, and interest rates available elsewhere. Too often the "deal" applies only to short-term loans with high monthly payments. Be on the lookout for offers where the balance must be paid off in full by a certain date or double-digit interest will be retroactively applied. That is, if you even qualify for the offer.

6. Hair-raising insurance hikes
Making too many claims on your homeowners insurance can result in higher premiums, or even an insurer dumping you altogether. Oh wait, it gets uglier. Even calling your insurer will be noted in your history, and possibly used against you. The solution: Choose a high-deductible policy (which will decrease your premiums) and pay for the all the little boo-boos yourself. (For more on navigating the wacky world of "risk management" -- as your agent might call it -- visit our Insurance Center.)