Credit cards can be of a great help when shopping and making purchases, plus you earn potential rewards. At the same time, it assists you in boosting your credit history. Nevertheless, nothing comes for free. Since it is a kind of borrowing, credit cards do come with a variety of terms and conditions. Most of the cardholders only look at the annual fee of the card, but there are various other credit card fees and charges which you should consider.
Annual maintenance fees
Also known popularly as ‘annual fee’ and is not really a hidden charge. Sometimes, banks give a free credit card which means that there is less fees charged on availing the card or annual fee on the card for specific period. If it is only ‘free’ for a limited time, you will have to pay the annual fee once the offer period ends.
Cash advance fee
A certain part of your credit limit is cash. This is the amount you can withdraw from the ATM using your credit card. Cash withdrawal or advance is quite an expensive transaction as it involves fee or interest on the amount withdrawn. Furthermore, what many cardholders are unaware of is the interest charged on cash advances right from the day of cash withdrawal. The interest-free period is not applicable for cash withdrawals.
Over the limit fee
Depending on which credit card you use, you may or may not get authorisation for spending over the credit limit on your credit card. Banks do not permit this for free. They levy a hefty amount for over the limit fee transactions. Even if you have spent INR 10 over the limit, you will need to pay a minimum amount.
Late payment fees
If you are unable to pay the total outstanding amount on your credit card, banks provide you an alternative of paying a minimum amount. In case you are unable to pay even the minimum amount, the bank charges a late payment fee. A predetermined amount is levied on the based on your statement balance.
Interest rate
The Annual Percentage Rate or APR charged on your credit card also influences your bills, especially when you have an unpaid amount. This is the reason why credit cards can lead to financial debts because the interest rates on credit cards are the highest compared to other types of loans. But it is only applicable when you are unable to pay the total outstanding amount.
GST
All online credit card transactions will be levied with taxes as per the current rates in the country so the credit card holders should take a note of it.
If you are applying for the card, make sure to verify all the details. Most banks offer personal banking facilities to make sure you can avail all the services.
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