What are the Various Types of Credit Card Charges?
Credit cards are one of the most popular banking products used by the people across the world. However, a lot of users aren’t’ aware of the different kinds of charges that are associated with them.
- Interest: If a cardholder delays the repayment of the credit taken, they have to pay an interest which can be anywhere between 2% to 4%.
- Annual Charges: Also known as a membership fee, annual charges are fixed charges that must be paid irrespective of how much you use the card during a particular year. The fee is usually Rs. 500 to Rs. 1,000, but can also go as high as a few thousand rupees for the premium/elite credit cards.
- Late Fee: Every time you pay a credit card bill past the deadline, you have to pay a late fee. However, this can be easily avoided by making the minimum payment which is usually about 2% of the balance amount.
- Foreign Transactions: Credit card usage outside of the home country can attract a high fee. For each overseas transaction, you can expect to pay about 4% of the transaction amount as the fee.
- Over the Limit fee: If you exceed the credit available to you on your credit card, then you have to pay an “over the limit fee”. In most cases, you have to pay this fee even if you exceed the limit by just Rs. 1. What’s more, the fee is also fixed which can be Rs. 500 to Rs. 1,000, or even higher.
- Service Tax: If you default on a credit card bill, you have to pay a service tax of 18%. Before the Goods and Services Tax regime was implemented this tax was about 14.5% (14% Service Tax + 0.5% Swachh Bharat Cess).
- Withdrawal Charges: It’s not recommended to use credit cards for cash withdrawals as their charges are way higher than debit cards and stand at around 2.5% to 3% for each withdrawal.