Being a total essential in your finance management, credit cards function as the deferred payment basis, which simply means you get to enjoy the purchase and pay for it later on! However as exciting as it seems, managing your finances with credit cards needs your extra care and caution. Credit cards are the best way to easily access credits, isn't that amazing? Sure, it is!
Well, besides its dozens of benefits, if it is used in an excessive manner or without the proper financial planning, it could be quite a burden on your financial stability. And with such a massive increase in finance, one surely doesn't need over-budget. And many few know how expensive credit cards could be with their hidden charges, which is very stressful! That's why we have presented this article where we will be discussing all the charges of credit cards that you must be aware of. So, let's get started!
Many credit card companies charge a fee amount from their customers every year for holding the credit card. This totally depends on the company you have made your acquaintance with. The fee amount varies as per the company and card to card. However, there are banks and companies that provide credit cards without any annual maintenance charge, which means they are totally free.
The best way to avoid this additional charge is to simply opt for a no-annual-fee card. Or you can also ask for a retention offer and downgrading from the company if you have an annual fee card. This usually lowers the prices of the annual fee amount.
Different credit cards have different briefings. Among these, some provide the user to spend any amount, even if it exceeds the credit limit of the month. But the pinching point here is that this over-limit offer doesn't come free of charge. So, if the user is willing to exceed their card limits, they have to pay some fancy amount fee.
Banks provide this service after charging the customer for it, plus allowing them to exceed their card limit.
When you don't pay your credit card bill on its due date in each billing cycle, the bank and credit card companies charge some interest fee on it. And this interest per cent and amount are mentioned in your cardholder agreement, signed by you before opting for the credit card.
This charge is mentioned as the annual percentage rate (APR) and it varies as per your card's prime rate. You can easily check the amount of APR you are being charged on each billing cycle, by referring to your online account and your most recent credit card bill.
Banks and credit card companies usually charge a flat fee when you fail to pay your credit card bill on time and get a chance to pay your bill later. This directly impacts your credit score throughout. So, the credit card charges double-digit interest on its outstanding as well as subsequent charges.
As we know the government has regulated the mandatory order on the credit cardholders to pay some amount as the Goods and Services Tax (GST) on every credit card transaction.
This GST amount is levied on the annual fee of the credit card, interest payments and the processing charge on EMIs. Currently, it is running stable at the percentage of 18%.
On the credit card transactions made for paying railway tickets or petrol, an additional amount is charged as the surcharges.
This often leads to extra charges at credit card transactions.
Credit cards are widely used all across the world, speaking of which, people often use it to make foreign currency transactions. But to forward this, the company charges a little additional charge on the foreign transactions as the foreign currency mark up free.
This charge on foreign transactions varies as per different companies but on a wholesome number, it charges a fixed percentage of the transaction amount sum.
When you schedule your credit card bill payment for the month, but your bank account does not have enough balance, then your scheduled payment would be returned and the bank/ credit card company would charge the holder as a returned payment fee.
This becomes really tough for the holder and disbalances their bank stability. That's why it’s always recommended that before scheduling your credit card bill payment, you have a sufficient bank balance.
In conclusion, we can say that credit cards come with tons of hidden charges and expenses that are often ignored by the user but later on become really tough to manage. And that's why credit card holders or new users should have knowledge about the charges so that they use their credit cards with caution. These expenses involve an annual fee, credit card interest rates on late bill payments, additional charges on foreign transactions, cash withdrawals and many others. The disappointing part is these are not highlighted at the time of issuing the credit card. That's why we discussed all the credit card charges that the holder has the right to be aware of.
However, many of these charges vary as per the bank or the credit card company. Those who charge fees have variations in fees and some of these companies and banks do not charge any additional or hidden fee amount from their audience. Plus, there are options for the credit card holder to leverage on lowering these charges so that they do not have to face any extra burden. And all these facts and reasons combined state that it’s very important to know all the terms and conditions involved in issuing a new credit card so that it doesn't cost you more expenses.
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