It is a great feeling to swipe your Credit Card at the merchant establishment and take home your favorite products. The Credit Card Offers you the privilege of buying now and paying later. You get an interest-free period depending on the card you own and the billing cycle. There are other benefits like rewards points, discount offers, cashback privileges, and so on. However, all these facilities come at a cost. Are you aware of these Credit Card charges? You should be, as it can help you use the Credit Card better.

Statistics reveal that there are more than 11.5 Crores Credit Card transactions in a month in India. It explains the popularity of the Credit Card in the Indian market. Therefore, it becomes crucial to understand the charges and penalties associated with them. It can cost you a lot, especially if you are not careful enough.

Joining Fees and Annual Charges

Usually, Credit Cards come with a joining fee along with annual renewal charges. Some cards are available free as well. However, such cards might not offer the various benefits that you get from the cards that charge you the annual renewal fees.

The joining fees and annual charges can range from Rs. 0 to Rs. 30,000. You have to pay the joining fees before you start using the card whereas the banks debit the annual costs to your Credit Card statement every year. Specific banks waive the joining fee and yearly renewal charges to their customers on spending a particular threshold amount using their cards.

Interest Charges

All Credit Cards offer you the benefit of an interest-free period depending on the date of your purchase and the billing cycle. This period can extend up to even 50 days. The banks expect the cardholder to pay the entire bill on or before the due date failing which the banks charge interest at the contracted rate.

This rate can be in the range of 36% to 42% depending on the card you use. If you do not pay the credit card bills in full on time or choose to pay the minimum amount due, you lose the benefit of the interest-free period. It continues until you clear the entire outstanding dues on the credit card.

Late Payment Fee

As stated above, the cardholder should pay at least a sum equivalent to the minimum amount due on or before the due date mentioned in the bill. If you do not do so, the bank levies a late payment fee. The quantum of late payment fee depends on the balance outstanding on the Credit Card.

Higher the amount due on the card, higher is the late payment fee. It can go up to Rs. 950 under specific circumstances. You can avoid this payment by paying the minimum due amount on the Credit Card on or before the due date. Remember, a higher Credit Card utilization limit can hamper your credit score.

Over Limit Penalty

Usually, banks do not allow you to use the card over the credit limit sanctioned to you. However, the outstanding amount can go over the limit. Recurring debits to the account or charging of interest and penalties can push the Credit Card outstanding balance over the limit. Under such circumstances, the banks charge you an “over limit penalty” that can extend up to 3% of the amount over the limit. It is in addition to the interest charged by the banks on the Credit Card.

Cash Withdrawal / Cash Advance Fee

Credit Cards come with a cash withdrawal facility wherein the cardholder can withdraw up to an amount equal to the cash advance limit on the Credit Card. However, this facility does not come free. Every cash withdrawal incurs a cash advance fee. It is usually in the range of Rs. 300 to 500. Remember, the cash advance attracts interest at the contracted rate from the time of withdrawal to the time of payment of the card bill. The cash advance facility is a handy one, but very expensive as you incur additional expenses by way of cash advance fee and interest. It is better to use this facility as a last resort.

Other Charges

We have discussed some of the standard charges in a Credit Card account. There are specific other charges like cheque bouncing fees, cash deposit fee, payment dishonor fee, foreign currency transaction fee, emergency card replacement fee and so on. You should be aware of these charges.

One should consider these factors when while Applying for a Credit Card Online.

Also Read: Has Your Credit Card Been Cancelled? Don’t Panic

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