7 Charges and fee with Credit Card
Credit cards are a valuable financial instrument that can be used as a replacement for cash. Using credit cards, you can purchase your desired items and pay them back at a later date. Every credit card provider provides a timeframe (usually 40 days) for the borrower to repay the loan. However, every credit card holder must remember that there is no such thing such as a free credit card. Every credit card comes with a set of terms and conditions and charges. Here is the blog about various charges and fees that every credit card holder must be aware of:
Annual Fee
Annual fee is charged by Credit Card issuer and the amount varies from card to card. Some banks even offer free credit cards which means that there will be no joining fee or annual fee. It is important that you make note of the annual fee while availing the credit card from the bank
Cash Advance Fee
Every credit card has a certain cash limit. This is the amount that you can withdraw from the ATM. Withdrawing money from ATM is expensive as most banks charge 2.5% of amount withdrawn as transaction charge. Most banks charge 2.5% of the amount withdrawn or Rs. 500, (whichever is higher) as the base transaction charge and follows a slab according to the amount withdrawn)
Overlimit fee
Some credit cards allow you to spend beyond your credit limit. However, they levy a hefty charge for allowing so. Most banks charge a minimum of Rs. 500 as over the limit charge. It also depends on the amount by which you have crossed the credit limit. Please note that not every bank allows over-the-credit-limit transactions
Late Payment Charges
Credit card users have to settle their payment dues within the payment due date fixed by bank. Every bank follows a different billing cycle. If you fail to settle the payment dues within the due date, then the banks would levy a late payment fee. The Late Payment charges depends on the amount due, and every credit card provider has a slab that determines it.
Interest Charge
Credit Card interest rates are the highest compared to other types of credit. The interst rates ranges from 33-43%. However, they come into effect only during instances where you fail to settle the total dues. Banks allow you to make a part payment towards your credit card outstanding. If you settle a part of your dues.
GST
Every Credit card transaction will be taxed as per prevailing rates in the country, so, you should consider the game. A GST of 18% will be charged on annual fee, late payment fee, interest charges, and processing fee on EMIs.
Foreign Transaction Fees
Foreign Transaction Fees or mark-up fee is applicable on transactions that are carried outside the Indian soil. Mark-up fee will usually be 2% of the transaction value and it varies from bank to bank. For example, if you transact for 50$ USD somewhere in a foreign country, then the markup fee works as follows: The conversion for 50USD in INR is Rs. 4103, the markup fee of 2% will be applied on this transaction which is 82.06, so the total transaction that will be billed is Rs. 4185 (4103+82)