You may have received several notifications and messages providing you with a free purchase of a credit card. As alluring as this offer may seem, it is important to know that any credit card purchase will come with hidden costs and fees that may not be revealed to you. However, you are liable to pay these hidden costs in credit cards nevertheless.
Here are some of these fees and hidden charges that you should keep in mind when purchasing a credit card:
1. Interest Charge
When you make a repayment on your credit card, you have two options. One is the total amount due and the other is the minimum payment to be made. This interest rate is quite high and can range from 2% to 4% each month. The monthly interest rate will sum up to an annualized percentage rate that varies from 36% to 38%.
2. GST
A standard GST or Goods and Services Tax is applied on any transactions that you make using your credit card. The current GST that is charged on the transactions is 18% of the final bill amount.
3. Late Payment Fees
Making a payment after the due date mentioned in the statement of your credit card bill is eligible for late payment fees. This is a flat rate that is charged as per the lending bank and is not linked to the interest charges.
4. Annual Maintenance Charge
This is a fee that is applicable for any credit card that you apply for. When you are offered a free card, it means that your joining fee and the annual maintenance fee for the first year has been waived.
5. Balance Transfer Fee
This is a fee charged when you transfer your balance from one credit card to another. This can be as much as 3% of the amount that you are transferring.
6. Cash Advance Fee
For any cash withdrawals made on your credit card, a cash advance fee is charged. This is between 2.5-3% of the amount that you withdraw. This is subject to a minimum fee that is usually between ₹ 300 and ₹ 500 based on the bank that you choose to get your card from.
7. Finance Charge
This is an interest that will be applied to the amount outstanding after your grace period.
8. Overseas or Foreign Transaction Fees
For any transactions that you make in a foreign currency, these fees are applicable. This fee is up to 3% of the value of the purchases that you make overseas.
9. Over-limit Fee
This is a fee charged on any spends above the limit provided to you on your credit card. This amount will only be charged up to two billing cycles where the amount is over your limit.
10. Returned Check Fee
For any returns on your credit card payment, a fee of up to ₹ 100 is charged as a returned check fee.
11. Duplicate Statement Fee
If you require a copy or duplicate of your monthly statement, a fee is levied to cover the courier and other charges.
12. Card Replacement Fee
A fee may be charged by some banks to replace a lost or stolen credit card. This varies from ₹ 250 to ₹ 300.
13. Surcharges
For some purchases such as fuel, a surcharge between 1-2.5% is charged on your card.