Availing of a credit card is a massive milestone in life. While you may be excited to purchase it, you must be extremely cautious and careful in terms of the conditions applied to it. There is little doubt that credit cards come with numerous benefits. But the fact is irresponsible usage of it can hurt your finances extremely, leaving you financially burdened. To move cautiously through your financial journey, curated here is a list of credit card charges that you must know before you place the application for a credit card.
Credit card – hidden charges
Listed here are different credit card fees and charges that you may incur when using a credit card –
∙ Annual maintenance fees – Also called an annual fee, it is levied just once a year. It is crucial to remember that the annual maintenance amount differs from credit card to credit card. Additionally, there are specific banks that provide free credit cards. This means credit card companies and banks will not levy annual maintenance fees from the card user for a specific time – period.
∙ Cash advance charges: Each credit card user has a limit on the credit amount that can be withdrawn from the ATM through a credit card. This limit is basically a part of the overall user limit called the cash limit. It is essential to note that issuers charge an extremely high fee for cash advances and withdrawals. Additionally, finance charges are incurred from the day you withdraw the amount. This means there is zero interest-free period on cash advance.
∙ Over limit charges: Few financial institutions might permit their credit card users to spend the amount over and above their credit card limit. However, this is not provided free of charge. Financial institutions levy heavy fees, generally, at least Rs 500, which are the over-limit charges for letting their credit card users withdraw cash of more than the offered limit.
∙ Late payment charges: If somehow, you fail to repay your outstanding credit card balances on time, you get the choice to repay a partial amount over your overall balance. However, in situations where the user is unable to repay the minimum amount, financial institutions incur a fee called a late payment charge.
∙ Finance charges: Finance charges or APR (annual percentage rate) is the interest amount that is levied by the banks when credit card users fail to repay the overall outstanding due credit card bill towards the end of the billing cycle. It is necessary to remember that the APR incurred on the card bill is the highest of other loan types.
∙ Goods & services tax: According to the government rules and regulations, all the card users are bound to make GST payments on their card transactions. It should be noted that the GST is charged on the annual fee, processing fees and interest payments on EMIs.
∙ Foreign currency mark-up charge: While credit cards are considerably known to be worldwide accepted, there are still specific fees that are levied on foreign transactions called the foreign currency mark-up charge. This charge might vary from one card to another and is usually levied as a fixed percent of the overall transaction amount.
Availing on your first credit card?
You must be additional cautious of all the charges; if you are availing of SBI simply click credit card or credit card from any other issuer. Before you click on the SBI credit card apply button, ensure to go through the below-listed dos and don’ts:
|Effective usage of a credit card can ameliorate your score
|Irresponsible usage can negatively impact your credit score
|Keep your credit card thoroughly safe
|Losing your card might result in fraudulent and misused transactions
|Use your card to mitigate emergency expenditures
|Credit cards offer you borrowed funds, so avoid overspending
|Purchase credit cards of your requirement and use the same effect to earn benefits in the form of reward points, cash backs, discounts etc.
|Keep a continuous check on all your credit card offers like discounts and rewards on your credit card. And do not avoid it.
|Repay your bills by the due date
|Late payment of bills might result in high-interest fees
Credit cards have various hidden expenditures linked with them. If you are unaware of such card fees before availing of the credit card, you may be disappointed and feel exploited later. Thus, ensure to learn about all the expenditures that you might incur later. Your card might have an annual charge, or additional fees on the foreign transactions, finance charges on late payment of the card bills, additional fees on the cash advance etc., which might not be initially highlighted when you purchase a new credit card.
While there are specific fees that are charged by all the financial institutions and on kinds of cards, there still are few banks that tend to waive off some of the charges. Additionally, card users can even leverage low fees. Hence, it is extremely crucial to study all the linked terms and conditions with your card to find which card is correct for you and your financial requirements.
What are the hidden charges on credit cards?
A few additional fees charged on credit cards that financial institutions might not enlighten you about when providing you with your new card are finance charges, late payment fees, mark up fees etc. Ensure to read the terms and conditions of the card before availing it.
What are the different charges on credit cards?
Credit card charges involve annual maintenance fees, over-limit fees, GST, late payment fees, heavy finance charges on outstanding balances, fees on cash advance, foreign exchange fees etc.
What is an over-limit charge?
Few banks might allow your card users to transact an amount over your credit card limit. However, it is not offered for free. Banks charge an extremely heavy amount, which is generally Rs 500. This is called an over-limit charge that allows your users to withdraw a higher amount than your credit card limit.