Just so you know, there is no such thing as ‘free credit card’. A credit card is, of course, a good option for making a sudden purchase when you are running low on cash. Moreover, you can earn rewards too. You can build your credit history. However, you are actually borrowing money from a bank when you are using a credit card.There are credit card charges that you should consider before and after availing one.
Let’s take you through some points that you must know about Credit card charges and fees:
This is not a “hidden charge” that comes with a credit card. When you are availing a credit card, you must know that you have to bear the annual charges whether or not you make a transaction or not. It is a charge that you simply bear for the cost of enjoying the credit card. There are some banks that offer free credit card which means you don’t have to pay the annual fee for a certain period or lifetime. Watch out for hidden charges or terms & conditions whenever you are availing a ‘free credit card’.
It totally depends upon the credit card that you have. Some banks charge a hefty amount for over-limit transactions. Even if you are spending Rs 100 extra on your credit card, you may have to spend a minimum amount as an over-limit fee.
Finance or interest charges:
It is not a fixed amount like other fees. The amount varies depending on your card’s APR or Annual Percentage Rate and the amount of the balance that you have carried beyond the grace period. You can avoid them by paying your balance every month.
Foreign transaction fees:
You may have heard that credit cards are globally accepted. However, sometimes they do not reveal that there are some extra fees that you have to pay for foreign transactions. Top banks such as HDFC, SBI, ICICI, Axis charge a fixed amount on the transactions and you should really notice those before making one.
There is a fixed amount that you can directly withdraw from ATM. This is a part of your total credit limit that is a cash limit. Cash withdrawal using a credit card is a really costly affair and it can charge you 2.5% of the amount withdrawn.
Late -payment fees:
This is a basic fee for every credit card. You have to pay a minimum amount of your entire outstanding amount to your bank at a fixed date. If you are not able to do so then the bank will levy a late payment fee. It will be charged as a flat amount on the basis of your statement balance.
You should pay your credit card bills on time because there is an 18% GST that you have to pay on all credit card fees such as annual fee, late payment fee, cash advance fee, interest charges. This is not a hidden charge and you should be calculative while being late for the payment. The more you’ll be late the more amount you have to pay as GST.
So, these are some charges and fees applicable to all credit cards from all banks. You can get leverage on low fees and charges to get the most benefit of your credit card. Credit cards are really valuable when you are using them in the right way. It works as an emergency loan when you are in need. It can make your travel more convenient and safer. So, you can understand that credit cards are not something that you can stay away from. Rather, you can know all the terms and conditions that come with it and put those for good use.