- Remember to always read the fine print before opting for a credit card
- There are a lot of hidden charges that come along with using a credit card
1.The lure of free first year: They all say free for the first year, no joining charges but it will be wise if you reconfirm from your card salesman. Such cards may be free for the first year but there are annual renewal charges also in case you do not spend a certain amount of money within the first year of joining, a fee is charged.
2. Spending like there is no tomorrow : When you get a credit card you tend to think that it is an unending source of ready money but be careful on how you splurge. You cross the set limit and when the interest is charged then you have a 5 per cent charge imposed as overdraft fee. Keep your credit card outstanding to the minimum possible
3. The omnipresent service tax: There is 15 percent service tax which is applicable on interest, fees and other charges. Service tax is applicable on the interest charged on credit cards since it is a service provided by the bank to the cardholder. For now with demonetisation on the government will waive the service tax on debit and credit card transactions of up to ₹2,000 in a bid to promote digital transactions.
4. Cash withdrawals: Yes, they tell you that you can withdraw cash using your credit cards and you begin treating your credit card like an ATM debit card but we warned cash withdrawn attracts an interest at 3 to 4 per cent per month, there is also a transaction fee on cash withdrawal. This charge depends upon your bank.
5. Late on your bills: Like being late to pay your phone’s bill attracts a late payment fee of close to ₹100 and above, in the case of credit card payment also it is the same. You will end up paying late payment charges and charges on revolving credit plus service tax will be levied as applicable. Also, be sure not to pay your bills too early also. The late payment charges vary between Rs 100 to Rs 700 depending on the total payment due. However, there is good news for those who were unaware, you get a three-day grace period to pay your bills after the payment due date. This is a directive from the RBI.
6. Foreign transaction: Many credit card companies charge a fee for transactions performed abroad, usually 2 – 3 per cent of your total purchase. In some cases, credit card companies even charge a conversion fee for purchases made online from foreign merchants. So pay attention when you buy from sites that require conversion of dollars into Rupees.
Last Updated 31, Mar 2018, 6:51 PM IST