What are the Hidden Charges in Credit Card?

Planning to apply for a credit card? Here's what you should know about its fee and charges that might be applicable on your card: Read ahead more at loanbaba.com.

Annual maintenance fee

What are the hidden charges in credit card? Have you ever wondered? The annual maintenance fee is usually applied when customers avail credit cards without requiring any joining and annual fee for a year. Thus, before you opt for a new free cost credit card, make sure you are not applicable to any annual maintenance charge for lifetime.

Interest rates

You will receive your credit card bill every month. It will show up the amount due along with the minimum amount to be paid. Usually, people end up paying only the minimum amount thinking the rest is payable later. It is imperative to realise that this may result in a debt trap. The interest rates generally charged ranges from 2 – 4% of the unpaid amount.

Annualising this monthly interest rate brings you to an interest rate of 36 – 38% that becomes a huge burden and is essential charges of credit card. Hence, make sure you pay all your bills on time and not consider only the minimum amount payable. Else, interest rates can be a big pain.

Service tax

All credit cards are subject to service tax as per the tax laws.

Late payment charges

In case the users do not pay the due on time, they are charged an additional amount called late payment charge and you must enquire about these hidden charges before buying the product. This is applied only if the user fails to pay the outstanding balance on time. Late payment charge is a flat fee and does not relate to the interest cost.

Overdraft fee

If the user exceeds his monthly credit limit, then overdraft charges will be applicable on the exceeded amount. This is valid even for best credit cards.

Foreign transaction charges

In the case of a transaction carried out abroad, a charge of 3 – 5% will be applicable on the purchase. It will be converted into INR and shall be applicable depending on the exchange rate.

Purchasing petrol charges

Using credit cards to book rail tickets brings extra costs. A fee is applicable as a percentage on the total transaction.

Outstation cheque charges

Using outstation cheques lead to additional charges to settle the credit card bills. The fee applicable is a fixed percentage depending on which slab does the bill fall into.

Bouncing of cheque or dishonour of ECS charges

While paying your credit card bills through cheques, a cheque bounce can result in additional costs.

Cost card charges

In the case of a lost card, the user gets a new card only after payment of penalty charges.

ATM withdrawal fee

Withdrawal of cash from ATM through your credit card can cost you 2.5% of the cash advance. The interest is applicable on cash from the date of withdrawal at 24 – 46% per year.

All the information cited above at loanbaba is for informational purpose only, and you must keep a check on the credit card charges from the providers for updated details.

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