Don’t let your card play hide and seek with you.
Did you wish that your credit card came with fewer charges? It would be so much easier if you only had to settle the money you borrowed. But interest is not the only amount you pay in excess. This article will take you through some of the most common charges that are usually hiding in plain sight.
Cash Advance Fee
A cash advance is the amount that you withdraw from an ATM using your credit card. This is usually not encouraged because there are hefty charges levied on the withdrawal of cash. Usually, the cash advance fee is 2.5% of the cash advance amount. Cash withdrawal also comes with finance charges that are charged instantly, even during the interest-free period.
You could avoid this charge if you make it an informed decision to never withdraw cash from your credit card. When you do feel that you need emergency cash, withdrawing using your credit card might seem a viable option, but make sure you pay off the amount as soon as possible.
Late Payment Fee
A Late payment fee is normally charged on your outstanding amount when the minimum amount isn not paid by the due date. This fee also varies according to the amount that is paid off, and it differs from bank to bank. For example, if the total amount due is between INR 100-500, your bank might charge you INR 100. But, if the amount you owe is between 501-5000, the bank will charge a considerably higher amount. The late payment fee in most cases, progressively increases as the balance becomes higher. This is a payment that you can avoid by paying your credit card bills on time
Annual Maintenance Fee
You may think that credit cards only come with the joining and first-year fees. Though it might not be mentioned explicitly, you have to pay an annual maintenance fee every time you renew the credit card. Not every bank imposes this fee, but the best way you could avoid it, is by enquiring about it well in advance.
Cash Processing Fee
A cash processing fee is normally charged when you pay your credit card bills in cash. It is important to keep this in mind while paying your credit card dues so that you can explore other options that do not have additional payments attached to them. Banks also allow you to pay via other means such as net banking, cheque payment and mobile banking.
Reward Redemption Fee
Rewards are often the gem that stands out with payments. What is little known however, are the charges that come with their redemption. Banks charge their customers for redeeming reward points even when the reward is a product or voucher. Not all terms and conditions mention it explicitly, so make sure that you read between the lines to know about this hidden charge.
Hidden charges or not, you always have to be careful, and enquire about the cost of borrowing applicable to your credit card. Knowing all the charges will help you use your credit card wisely, and save you from paying unnecessary compensation fees.