9 Hidden Credit Card Fees in India & Tips to Avoid
Aditya recently joined his first job and his banks where salary account his created offered him a zero joining and annual fee credit card. Aditya was overwhelmed with the bank’s gesture and started using the card wherever possible. However when the first monthly bill came, he went berserk as the card company levied many other charges which he was not even aware of. So before deciding on buying a credit card, make sure you are aware of following mentioned hidden credit card fees charged by companies in India:
- Annual fees and other charges: In order to lure customers, card companies offer them no annual fee or joining fee credit cards. But remember that these cards are not always free for a life time. After first year, the fees will be applicable which starts from a minimum of Rs. 200 and higher. Check out credit cards with no annual fee
- Revolving interest rate: If due payment is not made before the final date then every month 1.99% to 4.00% interest rate will be charged. Although this looks a small figure but when you convert this to annualized percentage rate (APR) it becomes 24% to 48%.
- Higher charges when card limit is exceeded: If card holder exceeds the credit limit then you are charged higher fee which is a fixed percentage of the overdrawn amount.
- Late payment charges: Every card company charges hefty fees when late payment is made. This fee is either fixed or changes depending on the amount. Remember that frequent late payment will affect your credit score resulting in denial of loan or credit card.
- Service tax: Other hidden charge on the credit cards in India also includes 14% service tax which is applicable on interest, fees and other charges.
- Outstation cheque fees: If card holder uses outstation cheque to make the credit card payment then minimum service fees is applied on the cheque amount. This fee is fixed by most of the credit card companies.
- Fees on duplicate statement: Many card companies ask for extra fee upon request for issuing duplicate credit card statement. Best solution is to check your card statement online.
- Foreign currency transaction: If you are making any transaction online but the currency used is other than INR than be ready to pay a pre-determined fee for every transaction depending on the amount. So next time you buy any products in USD, GBP or others be ready to pay higher charge. This is because foreign transaction amount is converted to INR as per the mastercard or visa rate.
- Cash withdrawal charges: Withdrawing cash from ATM of the card issuing bank or other carries a fixed charge depending the amount withdrawn.
How you can avoid hidden charges on credit card:
- Before applying for a credit card do a detailed research on which company is offering the best deal
- Buy a card depending on your need
- Understand all the charges and go through the terms and conditions
- Be careful while shopping and do not make impulsive buying
- Pay all bills before the due date
- Read monthly statement and complain about incorrect charges
- Never buy more than your credit limit
- Pay attention to conversion rate when foreign currencies are involved