Know About These Credit Card Charges

Using credit cards to make purchases and receive rewards is beneficial as it also aids in establishing your credit history at the same time. However, credit cards have several terms and restrictions as they are a form of borrowing. Most people consider the card's annual fee, but you should be aware of various credit card fees & charges which is explained below:

Charge for Annual Maintenance

Although it is sometimes referred to as an "annual fee," this price is not "hidden." The amount of the yearly fee varies from card to card and is assessed once a year. There may be no joining or annual fees for the card for a set time or the rest of your life when banks provide free credit cards.

Advance Fee for Cash

Your cash limit is a portion of your overall credit limit. You may use your credit card to withdraw this much cash immediately from the ATM. As fees of up to 2.5% of the amount taken are involved, cash withdrawals and advances are costly transactions. Additionally, many of you need to be aware that interest is imposed on cash advances from the day the transaction is made; this is not the case for cash withdrawals made using a credit card.

Over-limit Fee

Depending on your credit card type, you might need help to go above the allotted spending amount. Banks do not permit this for free; instead, they impose an over-limit fee on such transactions. Most banks have a minimum price of Rs. 500, but it also depends on how much you exceed your credit limit.

Costs for Late Payment

Banks allow you to make a minimum payment if you cannot pay the total balance due on your credit card. The bank will charge a late payment fee if you cannot pay even the minimal amount. A flat fee is assessed based on the balance of your bill. As an illustration, consider the late payment penalty for HDFC Bank Credit Cards.

Rate of Interest (APR)

The Annual Percentage Rate (APR) that is imposed on your credit card also impacts your payments, particularly if you have an amount that is past due. Credit card interest rates are the highest in comparison to those of other loans, which is why sustaining credit cards can be challenging. However, this is only valid if you don't pay the balance owed. For instance, if the entire amount due for the month is Rs. 15,000 and you decide to pay just Rs. 5,000, the remaining money (i.e., Rs. 10,000) will typically incur interest at a rate of 33–42% each year.