Are You Aware of All the Charges Associated with Your Credit Card?

Credit card charges are the amounts a cardholder needs to pay due to his/her activities related to the credit card. This can be in terms of interest rates, joining fees, late payment charges, etc. Multiple credit card issuers charge you on credit cards for different reasons, like joining fees, annual charges, interest rates, etc. So, the charges on a credit card are not a standard concept for all credit card issuers. Credit card issuers have different policies and charges for cardholders, as per their credit card demand and handling. In this blog, we will understand the charges associated with a credit card. 

Key takeaways: 

1. A credit card helps people access funds within the credit limit in situations like emergency medical bills, shopping, etc. 
2. Improper management of the credit card may burden the user with different charges as per the credit card issuer’s terms and conditions. 
3. The credit card charges vary from one credit card issuer to another; not all credit cards provide the same credit card charges. 

What are the credit card charges? 

The word 'credit card charges’ itself sounds like a burden. Credit card charges are usually levied by credit card issuers on cardholders. They can be in terms of interest rates, processing fees, late payment charges, etc. Some of the charges are due to improper handling of the credit card, like late repayment, etc. 

Whereas certain charges may apply to cardholders based on the credit card issuer’s policies, such as joining fees and processing fees. Managing credit cards properly can help to lower charges such as late payment charges, etc., but the user needs to be responsible. 

What are the types of credit card fees you should know? 

Credit card fees are not just one. In fact, there are multiple types of credit card charges applied based on the cardholder’s activity related to the credit card and the credit card issuer’s terms and conditions. 

Here are the types of credit card charges you should know: 

1. Joining or annual maintenance fees: 

When you receive a credit card, you may need to pay a joining fee, depending on the credit card issuer’s policy. This is because some credit card issuers do not apply any joining fee for some credit cards. So, it is highly necessary to know about the joining fee from the credit card issuer. Moreover, some credit card issuers may apply annual maintenance fees on the credit card, which you need to pay annually. These depend on the credit card issuer’s terms and conditions, the type of credit card you choose, and the benefits the card provides. 

2. Interest charges: 

Credit card interest may apply when you carry an outstanding balance instead of paying the total amount due by the payment due date. The credit card statement is generated at the end of every billing cycle, after which you need to repay the outstanding amount at the payment due date. This interest rate, or annual percentage rate, varies from one credit card issuer to another. So, it is important to know what interest rate is offered on the credit card you choose. 

3. Late payment charges: 

Situations in human life are unpredictable because nobody knows when the tables turn. Facing a financial crisis or forgetting a due date unintentionally is a part of life. Missing a credit card payment may result in late payment charges, depending on the issuer’s terms and conditions. Paying at least the minimum amount due by the due date may help avoid late-payment charges, subject to the card issuer’s terms. However, interest may still apply to the outstanding balance. So, checking the late payment charges is important because these credit card hidden charges should not be overlooked, as they can create more financial burden. 

4. Overlimit fees: 

Over-limit fees may apply when a cardholder uses an over-limit facility with the credit card issuer’s explicit consent, as per the applicable terms and conditions. Sometimes it may happen that you might need more money but do not have enough with you. So, the credit card comes in defence, but it also comes with certain limits as per the credit card issuer’s assessment. But if you use the credit card more than its limit, you might need to pay the over-limit charges to the credit card issuer. Therefore, keeping track of the available credit limit can help cardholders avoid transactions that may result in over-limit charges, where applicable. 

5. Cash advance fee: 

There can be situations where you need cash to use, but you might not have enough. Some credit cards provide a cash-withdrawal facility through ATMs, subject to the card issuer’s terms and applicable limits. Several credit card issuers may charge you a cash advance fee for withdrawing cash from the ATM. This cash advance fee may vary from one credit card issuer to another. Hence, this may affect your overall credit card costs. 

6. GST (Goods and Services Tax):

There are several charges that are taxed as per the current GST rules. Your credit card issuer may add GST to the applicable charges you fall under for credit card-related activities. Therefore, it is important to be aware of these charges beforehand.