On an average one metro guy gets 10-20 call per month for buying new credit card or upgrading old credit card. The reason bank’s give so much importance to credit card campaign is Interest rate on late payment fees. These are some hidden credit card charges which you need to pay once you pay late payment. You might end up paying 36-38% interest rate per year for late payment of credit card. This is pure gold for Banks, and that’s why you are being harassed with new credit card calls/sms and mails. Strictly avoid them.
Here top 10 Credit Card Charges which You Don’t Know or you are paying Right now. Hope this list will help you to save lot of money in coming days.
Top 10 Credit Card Charges in 2016
#1. Service Tax on Credit Card Payment
Thanks to Indian government, From 1st June, 2016 total 15% of service tax are being payable for using or purchasing any service. So, you must be paying 15% of service tax on things you buy with help of your Credit Card and Also on the payment of credit card bills too, you are paying 15% service tax, since you bought service of your bank!
2. Late Fee Charges
One of the most common charges which we all are paying right now. Normally, banks charges Rs.500-2000 of late payment charges if you fail to pay your credit card payment within 90 days. After 90 days, you will receive minimum payment option, if you choose that, you endup paying 30-40% credit card payment interest rate. And that will continue till all payment is written off. So, never pay late for your credit card payment, always pay upfront.
3. Limit Exceeding Charges
For example, if your credit card has Rs.1lakh of limit and you exceed the limit by purchasing or booking plane tickets of more than your Credit card limit, banks will charge you for limit exceeding charges. Even you exceed for Rs.0.50 paisa from your credit card, you need to pay limit exceeding charges. This charges might be Rs.500/- or more. Depends on your bank’s credit card and their terms.
4. Overseas transaction Charges
Many credit cards are only for domestic use, i.e you can use them in india only. Though, all visa/mastercard credit card can be used overseas too. But On overseas usage (because of currency difference) bank will charge you overseas transaction charges. This charge might be 3.5% of the transaction amount. This charge is of the currency you using for. I.e if you spend in US dollar, you need to pay 3.5% fees of USD only.
5. Interest Rate on Credit Card Due Payment
For any of the charges, late payment or money you have in your credit card due, the bank will charge you 3% interest rate per month which is around 36-38% per month. This is highest interest rate loan in the world, Best term plan strictly advise you to avoid this kind of loan. And in case you have Credit card dues which you cannot pay in one shot, advisable to convert it into Credit card which will reduce your interest rate to 16% per year, which is half of your regular credit card interest rate. These are interesting credit card charges which you must be unaware while using it.
Don’t Mix up with Interest rate and late payment charges, Late payment charges is one time charge, while interest rate is for multiple times.
6. Cash Withdrawal Fees
We must not withdraw cash with Credit card but in case of emergency, if you withdraw cash from credit card, you need to pay 2.5% of charges of amount you withdraw cash. After that, when you pay cash withdrawal amount, you need to pay 24-46% of interest rate from the day you withdraw cash. This is too high charges, almost double of money you withdraw will be taken as interest rate in one year.
7. Duplicate statement fees
Mostly you will get soft copy of credit card statement, but incase of duplicate statement you need for filing or IT return, you need to pay Rs.50-100 per copy for duplicate credit card statement.
8. ECS Fail payment
If any of the ECS bounce back with your credit card payment, you need to pay Rs.300-350 per transaction fees. So, you will get double charges, from the purchase or loan bank and from credit bank. Double Charges for not paying ECS on time.
9. Credit Card Replacement Fees
In case of your credit card gets stolen or got lots of scratches, you need to pay Rs. 100-300 for credit card replacement charge. These charges may vary from bank to bank, Like my HDFC bank charged me Rs.100 for credit card replacement.
10. Annual Fee of Credit card
Mostly you will get credit card on the name of “Free gift” from bank. You will also get free cash point offers with credit card. Many credit card companies will charge you annual fee on the name of joining fees. This Joining fees cum annual fee can be Rs.500-3000 per year. There are many credit cards which are free too but not most of them.
These are the some of credit card charges you are paying or you are unaware of. Best Term Plan strongly advise you to not use credit card, or in case you use it, please take care of all these hidden credit card charges. Yes, credit card is having many benefits too, but the charges are too high. For cashless transaction, we can’t rely on debit card all the time. Also, using debit card with huge cash balance is not good either, we have to use Credit card either way.
Just take care of Credit Card Charges and Enjoy cash less transactions. Have a Happy Shopping!