Credit Cards have been the talk of the town for a very long time. Only 6% of the Indian population own credit cards, but still bulk of the big e-commerce or POS transactions are via it. With that being mentioned, people take credit cards to enjoy its features and benefits but when Credit card hidden charges start to show-up they find themselves in the debt spiral which all the way makes it more difficult and stressful to maintain a credit card. This article focuses on the hidden charges which a credit card has and to help you in making an informed decision.
List of Credit Card Hidden Charges:
- Annual Fee: The applicants before applying must look at the annual fee charges. Sometimes, the credit cards don’t have the joining fee but charge a maintenance fee annually. Don’t fall into the trap of no joining fee. From second year onwards you may find out about the membership fee. So, it is better to read the most important terms and conditions of the concerned card before vouching for it.
- Finance Charge: Finance charges are also known as interest rates. Every bank charges interest on the outstanding balance and it can go up to 49.36% annually. The interest accrue on your credit card from the due date of payment. Even if you have paid a minimum of 5% of the due amount then also you will be charged an interest on the rest balance.
- Late Payment Charges: You can attract late payment charges on your credit card if you forget to pay the credit card bills on the due date. Banks may sometimes waive the late payment charges if your account is otherwise in good standing and usually pay on time. However, you can avoid this by paying a minimum amount of the due bill before the due date.
- Cash Advance Fee: Bank charges a certain fee on the cash withdrawal amount. You may not have any idea about this hidden fee while withdrawing cash through ATMs. For instance, HDFC Bank charges a 2.5% on the withdrawal amount or a minimum of Rs. 500 (whichever is higher).
- Overdraft Charges: You get a fixed credit limit per month on your credit card. While making purchases through your credit you may exceed the credit limit and you may be charged over limit charges.
- GST Charges: Bank Charges GST on all the fees charged by them like Annual/Joining fees, Late payment fees, foreign markup charges etc. Even GST is charged on any interest paid to them.
- Foreign Transaction Fee: Not all credit cards come with low foreign currency mark-up charges. If you are taking a credit card, kindly look out for this charge because on making international transactions you will be charged a higher mark-up fee. So, go for a credit card that has a low foreign currency mark-up fee. For instance, the standard foreign mark-up fee in India is 3.5% plus GST.
- Surcharge: On purchasing fuel, few credit cards provide a waiver on fuel surcharge. This can be a hidden charge if your card doesn’t provide such a waiver then you will be charged a surcharge on fuel transaction every time.
- Add-On Fee: Add-on facility allows you to get the same card issued for your immediate family members but you will be charged a fee in doing so. There are credit cards that do not have any add-on fee at all.
- Reward Redemption Fee: Bank charges a reward redemption fee on credit cards while redeeming accumulated reward points. There are few credit cards that do not have a reward redemption charge.
- Duplicate Statement Charges: In the initial stages you may have no idea about this hidden charge but you will get to know about this while applying for a duplicate statement. HDFC Bank charges Rs. 10 per duplicate physical statement.
All the applicants must be aware of the hidden charges that a credit card can possibly have. Rather being attracted only by the exclusive offers and benefits one should make a decision sensibly. There is no hard and fast rule that you have to apply for a credit card without acquiring proper information. Take as much time as you want to be very sure of your decision of buying a credit card. It becomes very hard to maintain a credit card’s fees and charges. Hidden charges on the top of other fees and charges can leave you distressed. Every bank has their own most important terms and conditions where you can find all the details of the fees and charges. The fees and charges differ from bank to bank and credit cards to credit cards. So it would be better to refer to the MITC before applying for a credit card.
If you are an existing cardholder and the bank has charged such hidden fees and charges, kindly share your experience in the comment section. If you have been charged any other credit card hidden charges which are not mentioned in this article comment below for all the readers.