Credit cards are like coins. It has two sides also, one that has all the perks and benefits and the other one which has fees and charges. Getting a credit card can be an easy task but maintaining it comes with a lot of responsibilities. Using a credit card recklessly and not paying the fees and charges you incur on it can lead you to a possible debt trap. You need to be aware of the hidden charges and fees that a credit card has. You can find all the fees and charges in the credit card’s most important terms and conditions. You should read the MITC before applying for a credit card. Hereunder is everything you need to know about credit card surcharges and fees.
Joining fees and annual fees: To get a credit card you will need to pay the joining fee and to keep using it you are required to pay the annual fees. However, there are credit cards that let you enjoy the spend-based waiver on joining and the annual fee. You can also vouch for credit cards that are entry-level credit cards and have no joining and annual fees; these are also known as lifetime free credit cards. The joining and annual fee varies from credit cards to credit cards.
Interest rates: Interest is charged on the credit card bill when you miss the due date. The interest rate also differs from credit card to credit card. The APR can go as high as 49.56% p.a. To avoid the high interest you should not delay in payment of the credit card due amount.
Overdraft charges: While approving the credit card issuer sets the credit card limit usage and using the credit card beyond the pre-approved attracts the overdraft charges. To avoid this from happening you can set the spending limit so that you do not go overboard in using the credit card and maintain a healthy credit utilization ratio.
Foreign markup charges: Credit card charges foreign currency markup fees on the conversion amount. This fee can range up to 3.5% and can be as low as zero depending on the variant of the credit card. Check this fee if you are taking a credit card for making international transactions because this can help you save the charges.
Fuel Surcharge: Using a credit card to make fuel transactions attracts the surcharge fee. To avoid this charge you can apply for the credit card that provides the fuel surcharge waiver.
Cash withdrawal fees: Credit cards attract cash withdrawal charges when you use them to withdraw money from ATMs. You should never use your credit card to withdraw cash from ATMs to avoid these charges.
Late payment fees: Credit card issuers also charge the late payment fees on the outstanding balance apart from the interest. This way you are burdened with high charges and frequently defaulting can lead you to a debt trap.
Bottom Line:
To conclude, you can find all the above-mentioned charges in the most important terms and conditions. You can avoid these charges by using a credit card sensibly. The first step is to analyze your spending habits and financial health in order to obtain a credit card that suits your profile the best. You should apply for a credit card that complements your financial health and stability rather than creating hurdles for the credit cardholder. You need to keep your credit card bills clear all the time and have a low credit utilization ratio to keep enjoying the endless benefits of a credit card. Credit cards are great to build your credit score or credit history.
Share your experience with the credit card and its charges in the comment section. You can also share about the credit card fees and charges that you think a credit card has and no one knows about it.