Credit cards are extremely convenient for people who travel frequently or go shopping frequently. it allows you to pay for things immediately with your card and then simply clear off all the accumulated costs and bills at a go. Furthermore, it allows individuals to pay for services even if they don’t have funds available at the time.
However, many people are extremely wary of using credit cards because there’s a view that they may be charged extraordinary fees on purchases made from credit cards. It is true that credit cards can rack up a lot of interest and fees over time if you’re not careful. However, if you take the time to understand all of the credit card terms and conditions, you can avoid most of them.
As such, the following is a guide to the charges applied on credit cards.
This is the most straightforward fee you will be charged. Depending on how advanced your credit card is, you will be charged an annual fee for the privilege of owning a credit card. However, if you’ve used your credit card considerably, it’s possible to get your annual fee waived off as well, though you’ll have to consult the credit card’s respective conditions for that.
Every time the billing cycle comes along, you will have to pay a minimum cost on your total outstanding amount. If you fail to make the minimum payment by your due date, you will be stuck with a late payment charge.
Cash Advance Fee
Credit cards also allow you to withdraw money from an ATM directly, even if you’re abroad. There’s generally an upper limit on how much money you can withdraw from the ATM using your credit card. Most people use this feature for financial emergencies. However, you will be charged a Cash Advance Fee on the withdrawal that can be anything from 2% to 3 or 4%. Furthermore, if you fail to clear out the balance by your due date, they start racking up further charges as well.
All credit cards come with an upper limit on the credit. If you exceed that upper limit, you’ll be charged an Overlimit fee on the total amount that you’ve exceeded. For example, if your credit limit is Rs. 75,000 but you spend Rs. 80,000, you’ll be charged for the additional Rs. 5000.
Foreign Transaction Fee
A fee charged on all purchases and withdrawals made in foreign countries.
Cheque Bounce/Invalid Cheque Fee
If your cheque bounces or you write an invalid cheque, you will be charged a fee on it. As such, you should only write cheques if you have the corresponding amount available in your bank at the moment.
These are some major charges and fees you should be careful about. However, in addition to these, there are various other charges and fees that can be applied based on your specific credit card. As such, you should read all your credit card documents carefully.