Credit Card

Hidden credit card fees to watch out

Using a credit card for making purchases not only help to build a good credit score, but also helps to earn amazing rewards and cash back on what you spend. Credit card offers can be quite tempting but unless you read the fine print, you could be hit by hidden fees or charges. There are several other credit card fees and charges which should be considered before apply for credit card

Here are the hidden credit card fees and charges that you must know:

1. Annual Maintenance Fee: It is a fee that is charged yearly for the convenience of having a credit card. There are a few banks that offer free credit card which means that the joining fee and annual fee have been waived for a period of one year but may be applicable from the following year. Hence, before applying for the credit cards, you must confirm if their annual maintenance charge is waived for a year or for lifetime.

2. Interest charge: If you do not pay your outstanding credit bills by the due date, an interest rate will be charged on the same. Generally, banks charge 2% to 4% on the outstanding bills. This monthly interest rate is annualised to arrive at an annualised percentage rate of 36% to 38%. which is very high.

3. Late payment charges: If an individual fails to pay the entire outstanding amount then the bank will levy an additional charge known as late payment charges. This is a flat fee amount and not dependent on the interest cost.

4. GST: All credit card transactions are subject to GST as per the current GST laws.

5. Cash advance fee: Cash advance fee is the amount that you can withdraw from the ATM using your credit card. However, withdrawing cash using your credit card is a costly affair as it entails fee as high as 2.5 percent of the amount withdrawn. Moreover, the interest is charged right from the day of making the transaction which means the interest-free period does not apply for cash withdrawals.

6. Over-limit fee: You may or may not be allowed to spend over the limit assigned to you on your credit card, depending on the type of credit card you have. Banks charge a hefty amount as an over-limit fee for such transactions. Even if you cross your credit card limit by Rs 10, your bank will charge you a minimum over limit fee of Rs 500 or 2.5% of the over limit amount, whichever is higher.

7. Foreign currency markup fee: The banks generally do not reveal that there will be extra fees for foreign transactions which are known as foreign currency markup fee. The fee is usually charged as a percentage of the transaction amount. The fee is usually 3.5% of the overseas transaction and is converted to rupees depending upon the exchange rate on the day you make the transaction.

So, before applying for a credit card, make sure that you are aware of all the additional charges and fees attached to it. This will put you in a good state and help you use your card prudently.

Summary: Using a credit card for making purchases not only help to build a good credit score, but also helps to earn amazing rewards and cash back on what you spend. Credit card offers can be quite tempting but unless you read the fine print, you could be hit by hidden fees or charges. Here are the hidden credit card fees and charges that you must know:

1. Annual Maintenance Fee: It is a fee that is charged yearly for the convenience of having a credit card. Before applying for the credit card, you must confirm if their annual maintenance charge is waived for a year or for a lifetime.
2. Interest charge: If you do not pay your outstanding credit bills by the due date, an interest rate will be charged on the same.
3. Late payment charges: If an individual fails to pay the entire outstanding amount then the bank will levy an additional charge known as late payment charges.
4. GST: All credit card transactions are subject to GST as per the current GST laws.
5. Over-limit fee: You may or may not be allowed to spend over the limit assigned to you on your credit card, depending on the type of credit card you have. Banks charge a hefty amount as an over-limit fee for such transactions.
6. Cash advance fee: Cash advance fee is the amount that you can withdraw from the ATM using your credit card.

However, withdrawing cash using your credit card is a costly affair as it entails fee as high as 2.5 percent of the amount withdrawn. So, before applying for a credit card, make sure that you are aware of all the additional charges and fees attached to, you can also compare between different best credit cards in India before applying for one. This will put you in a good state and help you use your card prudently.

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