Time are gone when people used to pay physical currencies for goods and services. Due to materialistic age and changing modes of marketing customer and business both prefer payment in digital mode as it is convenient for both. Government also encourage people to be less dependent on physical mode of payment. Changing modes of payment has given banks a great business opportunity. To grab this opportunity banks are issuing credit cards at very easy documentation. One common fact we usually ignore that credit cards are not free. There are so many charges levied on credit card and being a credit cardholder you should know.
- Interest- Getting a credit card without having any cost is fine , but if you didn't pay your dues on or before due date , it will attract a charge in form of interest. So being a credit cardholder you should know when and how interest is charged. Amount spent from credit card is absolutely interest free if it is paid back within due date. Most of the banks gives at least 21 days to 55 days to pay the amount outstanding, depends upon the date when it was spent and billing cycle. But in case if balance is carried forward, it attracts an interest. Banks usually charge a very rate of interest on balance carried forward which varies from 2% to 4% monthly plus taxes
- Late Payment charges- Late payment charges are charged from credit cardholder if the payment is not received on or before due date. Charges are varied from bank to bank and card to card. Usually Rs. 100 to Rs. 2,000 are charged in the name of late payment. Some of the banks doesn't charge for late payment if the minimum amount due is paid on or before due date.
- Over Limit Charges- Over Limit charges are charged by banks on credit cards , when credit card utilisation exceeded assigned credit card limit. For example, you are assigned a credit limit of Rs. 1,00,000 on your credit card, but you have utilised Rs. 1,02,000. It attracts a over limit charge varies between Rs. 500 to Rs. 1,000 plus taxes. Credit card also became over utilised because of interest and other charges.
- Cash Withdrawal charges- A credit card can be used to withdraw cash from ATM up to the assigned cash limit. But cash withdrawal is chargeable at the rate of 2% to 4% of the amount withdrawn, subject to a minimum of Rs. 300 to Rs, 500.
- Joining Fees-Joining fees is one time fee charged when credit cards are issued. Nowadays most of the banks are offering credit card at no joining fees.
- Annual Fees- This fees is charged from credit card holders in the name of annual maintenance. Sometimes it is waived off with a condition of a minimum shopping on credit card.