Geeta recently joined his first job and his banks where salary account his created offered him a zero joining and annual fee credit card. Geeta was overwhelmed with the bank’s gesture and started using the card wherever possible. However when the first monthly bill came, he went berserk as the card company levied many other charges which he was not even aware of. So before deciding on buying a credit card, make sure you are aware of following mentioned hidden credit card fees charged by banks in India
Types of Credit Card Charges you should be aware of
The annual maintenance fee
When you are told you are being given a free credit card, it probably means that the joining fee and the annual fee has been waived off for a maximum period of one year from the date of issuance, but after this initial period the annual maintenance fee is applicable to your card. This could range from Rs 1500 to Rs 3000 in a year.
If you do not pay the whole of the outstanding amount within the due date stipulated by the bank each month, an interest rate on the expenses incurred on your card is charged at the rate of 3 per cent per month.
While this may not seem exorbitant to you, what sales representatives do not tell you upfront is that the monthly interest rate is annualised to arrive at an annualised percentage rate (APR) which can be as high as 36-38 per cent.
Overseas transaction cost
Your bank will also charge you for every overseas transaction you make. This is usually 3.5 per cent of the overseas transaction and is converted to INR depending upon the exchange rate on the day you make the transaction.
Cash withdrawal on credit card
The transaction charges on cash withdrawal are as high as 2.5% of the cash advance. Over and above this you need to pay an interest on the cash right from day one, and this interest cost ranges from 24-46% per annul.
Cost for crossing card limit
Even if you cross your credit card limit by Rs 1, you bank will charge you a minimum over limit fee of Rs 500 or 2.5% of the over limit amount, whichever is higher.
Late payment fee
The Reserve Bank of India has recently come out with the diktat that banks must revisit the late payment charges on overdue amounts on credit cards. While this may relieve the burden of the card user by a tad, penalties are still applicable. Therefore, if you turn delinquent and do not pay your minimum amount due for more than 90 days you will be charged a late fee by your bank.
Foreign Currency Transaction
If you buy any product or pay for any services in foreign currency the charges applicable is known as foreign currency transaction charges. This credit card charges are in the range of 3-5% of transaction amount.
Outstation cheque fees
In case you settle your credit card dues using an outstation cheque. You need to pay an additional fee which is known as outstation cheque fees.
The charges applied by the vendor on the use of payment gateway is known as service charges. This fee is also known as user fee or convenience charges.
Cost of revolving credit
The credit card charges imposed on the customer if the payment due is not clear within specified time limit is known as the cost of revolving credit or revolving interest rate. The charges are the in the range of 1.99% to 4%.
How you can avoid hidden charges on credit card
Before opting for a credit card do a thorough research and make a comparison sheet to select the best credit card.
Understand all credit card charges by going through terms and condition document.
Avoid using credit card and at all places.
Pay your credit card dues before time. If possible opt for auto payment services.
Never spend beyond your credit limit.