6 Types of Credit Card Charges You Should be Aware of
A credit card gives you the freedom to purchase anything with the flexibility to pay later. However, whenever you are using the card, you need to be aware of the credit card charges. Read further to know more:
Holding a credit card is the greatest asset nowadays. Any individual can apply for the card with minimal paperwork. The processing is quick and you can avail a credit card that suits your financial situation. Several banks and financial institutions offer different types of credit cards to meet customers' unique needs. Owning a credit card has numerous benefits, however, you should also be aware of the various fees you may incur, at different points in time. Let’s get to know the six common types of Credit Card charges:
- Joining Fee: If you want to apply for a credit card, then you need to pay the joining fee as an initial cost for owning the card. It varies from bank to bank and on the type of card you wish to apply for. The joining fee is usually followed by an annual charge. However, some banks, like ICICI Bank do not impose an annual fee, in the first year.
- Interest Charges: This is usually applicable if you are not able to pay the total amount by the due date. The interest charges will be levied on all the new transactions, as well as the outstanding dues. The charges may go up to a maximum of 3.75%, per month.
- Late Payment Fee: If you are unable to pay the outstanding billing amount, then the bank will notify you to pay the minimum amount. If you do not pay the minimum amount, then the late payment fee is charged by almost all banks.
- Foreign Transaction Fee: Although some credit cards are accepted globally, you will still have to incur an extra transaction fee if you are swiping the card in any foreign country. The fee would differ from one card to another. It is usually around 3.50% and it is charged as a percentage of the transaction amount.
- Over-the-Limit Fee: Considering the type of credit card you choose, you are assigned a credit limit. If you are spending goes beyond the threshold limit, then your bank will charge an over-the-limit fee which can be around 2.50% on the over-limit amount.
- GST: The Goods and Service Tax or GST is applicable on all credit card transactions. Presently, the GST rate for banking and financial services is at 18%.
It is necessary to familiarise yourself with the charges that are applicable on the Credit Card transactions, in order to avoid last-minute glitches. There are some charges like late payment fees or over the limit fee, which you can avoid, if you are paying your dues on time and not going beyond the spending limit assigned to you.
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