INSUBCONTINENT EXCLUSIVE:
Credit cards can be a boon when used
judiciously as they entitle you to advance credit and great rewards
But if you're careless with your card use, you could incur charges, penalties and a hefty interest rate.To ensure that you use your card
smartly and not get overcharged, make sure you are aware of some crucial charges associated with credit cards.Joining or Annual FeeWhile
many credit cards come free of cost, i.e
no joining fees and perhaps exemption from annual fee for a particular period, the ones with bigger rewards and benefits generally tend to
Some may waive off the joining fee for the first year but may have it from the second year
Sometimes these charges are waived off if one spends up to a threshold specified by the bank.Interest and Finance ChargesMost credit cards
offer a 50-day interest-free period to pay for all spends
Some premium cards have finance charges regardless of where and when the card is swiped
But once the interest-free period passes, banks will levy an interest/finance charge to be borne by the customer if the full payment is not
made on time.Cash Withdrawal ChargesCredit cards also allow you to withdraw cash from ATMs
This option should be exercised only in emergencies
While there's an interest-free period for all other credit card transactions, the interest rate applies immediately for cash withdrawals
If you withdraw cash in an emergency, repay it as soon as possible to avoid the hefty interest rate.Over Limit ChargeThere is a charge if
you breach your credit limit and cash withdrawal limit
For instance, if your credit limit is Rs 1 lakh but you have spent Rs 1.25 lakhs on the card, be prepared to pay a charge
Normally a percentage of the excess spend is charged as penalty
So make sure to keep track of your spending and if you think you need to make a big purchase deposit the deficit amount by cash to the card
if necessary.Late Payment ChargesA late payment on your credit card bill can be disastrous in many ways
Firstly, your credit score gets affected, and secondly, you have to pay a late fee each time you are late in paying dues
While some banks charge a standard late fee, some charge a percentage of the amount due as late fee
Some may even charge an additional fee if your ECS for the credit card payment gets rejected.In case you don't have the full amount to repay
your card, make sure to at least pay the minimum amount due, in order to avoid the late payment penalty.Foreign Transaction FeeWhenever a
credit card is used for foreign transactions, whether online or at a point of sale, the bank levies a foreign mark-up fee
It ranges anywhere between 1.5 per cent and 5 per cent depending on the bank and the card
Cash withdrawals abroad are charged at a higher rate that card swipes
So when abroad you can carry enough cash or get a travel card to avoid these charges.Balance Transfer FeeA balance transfer is when you pay
off the balances on existing credit cards or loans by transferring them to another credit card account
While many high value cards allow this free of cost, in some cases you may be charged a fee to complete the balance transfer - typically a
percentage of the transfer balance
It is basically an expensive way to move money from one account to another, rather moving debt from one account to another, and you must
avoid getting to this point by repaying your debts in a timely manner.(Adhil Shetty is CEO of Bankbazaar.com)Disclaimer: This is an
advertorial and TheIndianSubcontinent is not responsible for the accuracy and completeness of the same.
