Although credit cards are a great benefit, they frequently come with a number of fees that, if you don’t pay them on time, go over your limit, or use them for anything other than regular purchases, could cost you a lot of money.
After demonetisation, credit cards have become an essential part of modern life because of their widespread use. Cardholders can choose to repay their loans, make full product payments, or take out EMIs.
When you apply for a credit card, you must agree to a number of terms and conditions. If your application is approved, you will receive a lengthy cardholder agreement in the mail. Each fee that could be applied when using a credit card is listed in these documents.
In order to reduce or completely eliminate the various fees you may incur, it is essential to be aware of them. The most common credit card fees and ways to avoid them are listed below.
Cost per year:
The yearly charge is really not a ‘covered up’ expense. The price of the annual fee varies by card and is assessed once per year. Although credit cards are occasionally given away for free, there will never be an annual or joining fee.
Simply select a card with an annual fee to avoid paying the fee. If you currently have a card with an annual fee, you can either ask for a retention offer or switch to a card with a lower or no annual fee.
Interest Rate:
Interest is charged if you don’t pay off your credit card in full each billing cycle. Your annual percentage rate and interest rate are outlined in your cardholder agreement. However, this only applies if you fail to pay the entire balance.
Paying your bill in full each month is the simplest way to avoid paying interest. If you are unable to pay your bill in full, reduce your spending or look into a credit card with a 0% APR that does not charge interest for up to 21 months.
Overage cost:
You may or may not be able to spend more than the limit on your credit card, depending on the type you have. You can’t do this for free with a bank; Instead, as an over-limit fee, they charge you a large sum. The majority of banks demand a deposit of at least Rs. 500.
International business:
Although credit card companies make a big deal about the fact that their cards are accepted all over the world, they rarely talk about the fees associated with international transactions, which are sometimes called a foreign currency markup fee.
The fee, which is often calculated as a percentage of the total amount spent, varies from card to card. If you have average credit, you should think about getting a credit card with no foreign transactions to avoid this.
Fee for late payment:
Banks offer you the option of paying the minimum amount owed if you are unable to pay the full balance; if you are unable to do so, the bank will charge you a late payment fee. It will be billed based on the balance on your statement.
By paying the minimum amount due or the entire bill by the due date, this can be avoided.
