11 Credit Card Fees Every Credit Cardholder Should Know

According to a survey report published in January 2018, there are over 36.24 million credit cards operating in the country. The actual number of cardholders hovers somewhere close to this number but the question remains: how many of these 30-odd million people actually know the various types of credit card fees that a credit card comes with? The chances of a vast majority of these people not knowing these charges are very high. In case you are one of those, let’s take a look that 11 different types of credit card fees every credit cardholder should know.

11 Credit Card Fees Every Credit Cardholder Should Know

1.  Joining Fee and Annual Fee:

Earlier when credit card usage was at its nascent stage in India, banks and other card providers charged what was known as a joining fee. However, as they realized people would rather not pay to obtain a credit card, most of the companies scrapped the concept. These days most cards come without a joining fee with some even offering lifetime validity. On the other hand, an annual fee is charged by some of the premium cards which come with high spending limits. Besides, these cards waive off this fee in case the usage reaches a certain point.

2.  Late Payment:

Every bank or card company charges a late credit card fees if a payment is made past the actual due date. This payment can either be fixed or a certain percentage of the outstanding amount and has both a minimum and a maximum limit. For starters, let’s say the late payment charges are 25% of the outstanding amount, the credit card fees can vary between Rs.250 to Rs.500. Note that, most of the banks charge this on a daily basis. Also, the extent of the charges vary from card to card and the bank involved.

3.  Cash Withdrawal:

In case you decide to withdraw money using a credit card, banks tend to levy a withdrawal charge. This happens even though you have enough credit limit on your card. This charge can range from 2.5% of the transaction amount or a minimum of Rs.250 at times. 

4.  Interest:

This is the amount the bank charges on a purchase in case you fail to clear the outstanding amount within the interest-free period. This charge is also called the Annual Percentage Rate (APR) and it typically ranges between 30% to 48% per year.

5.  Duplicate Statement:

Every cardholder receives a statement each month delivered to their registered address, which states all the transactions they have made with their card. However, if you ask for a duplicate from the bank, you will be charged a fixed amount for the same. For example: the card lender may charge Rs.100 for a statement for the last few months.

6.  Cheque/ECS Return:

This goes with the payment of your outstanding amount. In case the payment you make using a cheque or an ECS fails due lack of balance in your account, you will be charged a bounce credit card fees.

7.  Service Tax:

Service tax is the charge levied on a card and every transaction and it amounts to about 10.3% of the expenditure on a card and is inclusive of all the interest, fees, and various other charges.

8.  Petrol charge:

This charge is levied on almost every card except on fuel-based credit cards and this amounts to 2.5% of the transaction with the minimum being Rs.10.

9.  Railway ticket-booking charge:

In case of a railway ticket, a charge is levied, with the cardholder required to pay a 2.5% on the transaction, with the minimum amount in this case being Rs.30.

10.  Overdraft charge:

There are times when a credit cardholder goes beyond their credit limit. In such a case, an overdraft credit card fees is charged at 5%, with the minimum being Rs.300 while the maximum stands at Rs.600.

11.  Foreign currency charge:

If a card is used in a foreign country, a foreign currency charge is levied with the exchange amount being specified by the service provider, i.e., VISA or Mastercard. In this case, the charge stands at 3.5% with the minimum being Rs.350.

These are some of the most commonly seen charges levied on a credit card transaction. Knowing these will not only help you better understand your bill, it also gives you an idea of which of them to avoid.