credit card fees

Types of Credit Card Fees you Must Know About

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India has witnessed an exponential growth in the usage of credit cards, with RBI data suggesting a total of 46.1 million cards in operation as of 2019. Until October 2020 as well, there has been a remarkable surge in new credit cards issued. Such an increase in the usage of credit cards has been mostly fuelled by the digitization of payments, wherein individuals are opting for more cashless transactions than ever before.

Nevertheless, the usage of credit cards comes at a cost, whereby the card issuer levies certain charges that are mandatory to pay within the stipulated time frame as and when levied. A cardholder may or may not be responsible for paying some of these fees depending on how well he/she maintains the card, while others are levied mandatorily. Certain changes such as the credit card annual fee are payable for enjoying the privilege of possessing such a credit instrument.

A cardholder must thus consider the several types of credit card fees before he/she moves on to using the payment card.

Annual Fees

A credit card annual fee is chargeable to cardholders for simply availing the privilege of possessing a card. Usually, such a fee is payable on credit cards that come with enhanced reward programs. It is a fee that is chargeable once a year and tends to differ based on the rewards and other features offered under a card type.

The credit card annual fee is, however, mostly not payable on cards that do not come with a joining fee. Also, some cards may come with a first-year free usage, whereby the charges are levied post the commencement of the second year of use.

Over-Limit Fee

All credit cards come with a specified credit limit up to which the users can utilize their card as financial institutions do not allow unlimited borrowing transactions with these tools. However, some cards provide users the liberty to make transactions post the limit specified, albeit at a cost, chargeable as an over-limit fee. As these charges are substantial, it is best to keep card utilization within the limit specified.

Further, maintaining a utilization of less than 30% of the limit provided also helps cardholders to use their credit card to improve their credit score. It can be hard to get a Loan with a bad credit score therefore, always maintain a good credit card score.

Cash-Advance Fee

Certain credit cards come with a cash limit, which is the amount of money available for withdrawal via ATM transactions. The facility can, nevertheless, be costly as it attracts high-interest charges on a daily basis.

Some card variants contrarily make ATM-withdrawal affordable with industry-first features such as interest-free ATM withdrawals. You can avail of benefits on purchasing automotive parts with a Firestone credit card login.

Foreign Transaction Fee

In the case of international transactions, cardholders will also need to pay a foreign transaction fee against every credit card usage. Such a transaction fee can range from 1% to 3%, depending on the usage. Cardholders who use their cards for transactions made in foreign currencies or for the ones that are routed through foreign financial institutions thus need to pay such charges. Even, the usage of credit cards for withdrawing cash through overseas ATMs can result in a levy of foreign transaction fees.

In such cases, the cardholder can choose to opt for travel credit cards as they help in limiting charges on certain transactions or waiving off these fees altogether. This way they can use their credit card wisely to maximize the usage.

Late Payment Fee

A late payment fee is applicable on a credit card in case the cardholder fails to make a bill payment on the specified due date. The payment due date arrives to post the end of the grace period, which is a 15 to 20-days duration available for bill payment after the billing cycle ends. The fee is also charged if the payment amount is less than the minimum amount due.

This late payment fee tends to vary depending on the type of credit card or the number of times the cardholder has missed the due date.

Other fee payments on your credit card may include GST, charges applicable after the moratorium, etc.

In case you plan to apply for a free credit card, then it is always advisable to look for a suitable financial institution to avail the best features.

The NBFC also provides existing customers with pre-approved offers, which simplify the process of availing finances. By providing your name and contact information, you can easily check your pre-approved offer on your credit card. These offers are also available on several financial products such as business loans, personal loans, etc. One can also look for a suitable card variant as per his/her spending needs and save on future purchases with suitable reward programs in place. Analyze your spending needs and cost benefits before applying for your credit card and before applying for any credit card must know the credit card annual fee.