Did You Know The Credit Card Are Not Free? Know All The Hidden Charges

While banks may advertise that a credit card is free, but the reality is quite different. Everything comes with something. The same goes for Credit Card. Credit cards are not free, they have hidden charges that are not visible to the customer. As a result, it's critical to understand some of the key terms and conditions that most customers are ignorant of.

The Bank

What credit card banks or credit card representatives don't tell you is that there is a slew of fees that apply to them. Here are some of the credit card fees you should be aware of before applying for one. Customers need to read and know all the hidden charges that they might pay in future. Let's find out the hidden charges!

The Hidden Charges

Here are some hidden and unknown charges on the credit card charged by the banks:

Interest

When making a credit card payment, you have two options. First, the entire amount owing is one, while the second is the required minimum payment. This is a very high-interest rate, ranging from 2% to 4% every month. The monthly interest rate will add up to a 36% to 38% annualized percentage rate.

Fees On Late Payment

Late payment penalties may apply if you pay your credit card bill beyond the due date listed on the statement. This is a one-time fee that is set by the lending bank and is unrelated to interest payments.

Goods & Services Tax (GST)

Any transactions made with your credit card are subject to a standard GST. The current rate of GST on transactions is 18% of the total bill amount.

Maintenance Fees (Annual)

This is a one-time charge that applies to every credit card you apply for. When you are given a free card, it indicates that your membership cost and yearly maintenance charge have been waived for the first year.

Fee For Transferring Balances

When you transfer your amount from one credit card to another, you will be charged a fee. This can be as high as 3% of the total money being transferred.

Charges For Finance

This is the amount of interest that will be charged once your grace period has expired.

Overseas Fees

These costs apply to any transactions in a foreign currency. This cost might be up to 3% of the total value of your international purchases.

Fee For Exceeding A Limit

This is a fee applied to any purchases made with your credit card that exceed the limit set for you. Where the amount is beyond your limit, this amount will only be charged for up to two billing cycles.

Checks Returned Fee 

A fee of up to 100 is imposed as a returned check fee for any returns on your credit card payment.

Second Statement Fee

A fee is charged if you want a copy or duplicate of your monthly statement to cover courier and other costs.

Cash Advance Fee

A cash advance fee is applied for any cash transactions made with your credit card. This is usually between 2.5% and 3% of the amount you remove. This is subject to a minimum cost, which varies between Rs 300 and Rs 500 depending on the bank from whom you obtain your card.

Finance Fees

This is the amount of interest that will be added to the amount owed once your grace period has expired.

Fee For Making A Duplicate Statement

A fee is charged if you need a copy or duplicate of your monthly statement to cover courier and other costs.

 

Fee For Exceeding The Limit

This is a fee that is applied to any purchases that exceed the credit card limit. This amount will be charged for up to two billing cycles if it exceeds your limit.

Fee For A Returned Check

A returned check fee of up to 100 is levied for any returns on your credit card payment.

The Fact

The above-mentioned charges show the credit card you're using given by the banks isn't free at all, and the majority of the fees aren't even disclosed upfront. Having knowledge and understanding about these different charges and fees can help you to use your card efficiently and wisely. Before you apply for the card, make sure you read the issuer's "Most Important Terms and Conditions." Wisely credit card usage will also help you maintain your CIBIL (Credit Information Bureau (India) Limited) score and general financial health.