In the current economic scenario of India, we’re talking about demonetisation, using credit cards over apps and cash is very understandable. However if you thought that credit card do not cost anything until the due amount is paid on time then you are wrong.
Although credit cards give you comfort and convenience, there are various charges associated with them apart from the late payment fees. And these charges if goes unnoticed can put card holder in a debt zone unknowingly. So next time before swiping the card, read the card statement showing various costs minutely. Alternately you can also read the fineprint i.e. document which mentions the terms of card usage.
Here are costs, paid by the card holder:
Annual fee: This is the fee charged by the card issuer every year. However this may be waived off when certain pre-fixed amount is spent in a year. Normally Rs. 200 is the minimum annual fee charged by most of the card issuing company. However there are cards with no annual fee available in the competitive card market.
Late payment fee: Almost every card owner must be knowing this fee. This is a fee paid when the balance is not paid on time. A flat fee is charged irrespective of the number of days delayed or depending on the card type.
Overdraft charges: If spend on the card is higher than the credit limit then a fee is charged known as overdraft charge. It is a fixed percentage of the overdrawn amount.
Foreign transaction charges: If you purchase any product or pay for any service in currencies other than Indian rupee, then this fee is charged which is typically in the range of 3%-5% of the transaction amount. This is commonly seen in online transactions when products/services are purchased in foreign currency.
Service tax: Expenses on the credit card are subject to service tax which is levied on the total value of the transaction at 14% service tax applicable on the intrest, fees, and charges.
Outstation cheque fees: If you use an outstation cheque to settle your credit card dues, then you will be charged a fee which is a certain percent of the cheque value subject to a minimum amount.
Cash withdrawal charges: Withdrawing cash from ATM with credit card attracts charges. The transaction charges on cash withdrawal are as high as 2.5% of the cash advance.
Duplicate statement fee: Cardholders are charged a fee on request for issuing a duplicate card statement.
Revolving interest rate: If you do not pay your final due amount before the final date, then you would be charged 1.99%- 4% interest every month.
Cheque bounce: In case, you make a card payment via cheque and it bounces or there is a failure of ECS, it would attract a fixed amount penalty by the card issuer.
Petrol and railway ticket: Using the credit card to fill petrol or rail tickets attracts additional charges. This charge is a flat percentage of the amount spent. Check out credit cards for fuel purchase in India along with their benefits.