Hidden Charges Of Credit Card
Everything in this world comes with pros and cons and that is the same in the case of credit cards. In this section, you will see hidden charges of a credit card. There is a lot of credit card hidden charges in your credit card statement which you will understand in this article.
Read Also: Difference between debit card and credit card
What Are The Major Hidden Charges Of Credit Card?
There are over 10 hidden charges applied by your bank on your credit card. Out of them, first, we will discuss the 4 major hidden charges.
- Late Payment Fees Charges
- Cash Withdrawal Charges
- Interest Charges
- GST
Let’s understand all the above credit card hidden charges step by step in detail.
Late Payment Fees
The prime hidden charge of credit card is late payment fees. If you do not pay your minimum due amount within the due date, you will be charged late payment fees by your bank. These late payment fees vary according to bank and credit card. The late payment fees can be around 200-1000 INR.
Cash Withdrawal Charges
There is a cash withdrawal charge levied on your credit card. These charges vary from 2 to 3% according to your credit card. For example, if you withdraw 5000 rupees, you will be charged by 100 rupees @2%.
Read More: How to transfer money from credit card to bank account?
Interest Charges
The major credit card hidden charge that makes a hole in your pocket is Interest Charges. You will fall into the debt trap due to this. The above charges are co-related with interest charges.
Moreover, there are many charges that revolved around it, which you will understand in this section. Let’s understand them in detail.
- Interest Rates Per Month
- Charges on Total Due Amount
- Cash Withdrawal/Advances
- Late Payment Charges
Let’s understand all of them step by step in detail.
Interest Rates Per Month
The interest charges cause a major blow with the interest rates which you have to pay every month. Interest Rates vary between 2 to 4% per month.
Let’s say if you pay 3% per month, so the total interest you pay in one year is 36% that is more than enough and you will remain in debt for a long time. That’s why I call it a debt trap in starting.
Charges on Total Due Amount
This means if you will not pay the total due amount within the due date, the interest charges will be added to this amount and you have to pay more for that.
Cash Withdrawal/Advances
If you withdraw cash with your credit card, you have to pay a debit interest fee to your credit card vendor.
Late Payment Charges
Apart from Late Payment Fee, if you will not pay the total amount within the due date you have to pay late payment charges as well.
GST
GST is another debt trap that will keep you under the debt. Let’s understand the GST charges in detail.
- All Additional Charges
- Interest
Let’s understand the above point step by step in more detail.
All Additional Charges
This means you have to pay GST for all the additional charges which we had discussed above. GST will be levied on Late Payment Fees, Cash Withdrawal Charges.
As a result of the intense competition among lenders, consumers now have the option of getting a credit card from First Progress Platinum even if they have no prior credit history.
Interest
According to the finance act, GST will also be levied on Credit Card EMI interest. Interest is neither a good nor a service but still, you have to pay GST on credit card interest charges.
These are the major hidden charges of credit cards which we had discussed in the above post. Now, we will discuss other credit card hidden charges levied by your bank or credit card vendor.
What Are The Other Hidden Charges Of Credit Card
As we have discussed major hidden charges of credit card, now we will discuss some more credit card hidden charges that are recovered by a bank from you.
| Annual Fee | Cheque Bounce or Auto-Debit Reversal | Fuel Transaction Charges |
| Over Limit Charges | Foreign Currency Transaction Fee | Lost or Stolen card charges |
| Credit Card Statement Charges | Cash Payment At Branches | Outstation Cheque Charges |
Let’s understand them all in detail.
Annual Fee
One of the most common charges levied by the bank is the Annual fee on your credit card. Most of the credit cards are generally free for the first year but after a year bank will charge you between 100-2000 INR. depending on your card.
Over Limit Charges
Most of the bank imposes over-limit charges on their customers. You will be charged 2-4% on the amount you spend beyond the credit limit.
Cheque Bounce or Auto-Debit Reversal
In case of cheque bounce or auto-debit reversal, you will be charged between 200-500 per transaction.
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Foreign Currency Transaction Fee
There will additional charges levied on you if you pay your amount in the foreign transactions. For example, if you are traveling abroad and paying your amount in foreign currency then you will be charged by a foreign currency transaction fee.
Charges may vary between 3 to 4% per transaction value.
Fuel Transaction Charges
If you are paying your petrol and diesel bills at the fuel pump through your credit card, you will be charged by 1 to 2.5% fuel transaction charges of the total transaction value. However, some of the credit cards may wave off the charges.
Lost or Stolen card charges
In case your credit card got damaged, lost, or stolen then you have to pay a flat fee of 100-300 rupees for reissuing your card again.
Credit Card Statement Charges
There will be a fee of 100-200 rupees for a certified credit card statement. These statements are used for address proof. However, there will be no charge on the online statement.
Cash Payment At Branches
If you are paying your credit card bills via cash then the bank will charge you 100-200 INR per transaction.
Outstation Cheque Charges
If you are using your outstation cheque to pay off your credit card bills then you have to pay 50-250 INR per transaction. In most cases, these charges are wave off by the bank.
Conclusion
The first 4 charges are the most important and you should be serious about that. Out of the all charges which we had discussed above the most important is interest charges. This is also considered a debt trap. Make all the payments within the due date and use your credit card smartly.
FAQs
Q.1 Is there any extra charges in credit card?
Ans. Of course, there are hidden charges or extra charges on a credit card. There are various charges levied on a credit card. Some of the popular hidden charges are fuel surcharge, transaction surcharges, cash advance, GST, reward redemption charge, etc.
Q.2 How can I avoid paying my credit card annual fee?
Ans. Generally, most credit cards come with an annual fee waiver feature. When you achieve the milestone rewards or complete the minimum spending criteria, then your annual fee will automatically be waived off.
Q.3 How do I avoid credit card charges?
Ans. The best and the easiest way to avoid credit card charges is to make all the payment of your outstanding bills on time. Moreover, the bank or the card issuer dispatches the statement to every customer on their registered email address and mobile number.
Q.4 Will credit card companies remove annual fees?
Ans. Generally, credit companies remove annual fees for their old and loyal customers who make payment on time. Moreover, one can ask the card issuer for annual fee waiver. However, some credit card provides annual fee waiver on reward point redemption.
Q.5 Can we swipe credit card for cash?
Ans. Yes, you can swipe credit card for cash if the cash advance feature is enable on your credit card. However, the are some charges set by the card issuer for cash advance feature.