Nowadays, credit cards have become a necessity for many people in India as they offer convenience and rewards. But before you apply for a credit card, it’s crucial to understand the various fees applicable to them. Many people only focus on the annual fee but there are several other charges that you should be aware of before applying. Knowing the credit card fees can help you make a better choice so that you can avoid unexpected costs when using a credit card India. Let’s explore all the types of fees related to credit card
Cash Advance Fee
When you withdraw cash from your credit card through an ATM the cash advance fee is applicable. It is convenient but it’s an expensive option. The bank charges a cash advance fee starting from 2.5% of the amount withdrawn from the ATM and interest on cash advances starts accumulating immediately. If you’re using a credit card in India then it’s best to avoid cash advances unless absolutely necessary.
Annual Maintenance Charge
The annual maintenance charge is the annual fee of the card. This fee is charged by the issuer once a year. The amount of the fee might vary depending on the type of credit card you are choosing and there are some credit card apps in India that might offer cards with no annual fee. But before you apply it’s important for you to confirm with the issuer whether the card fee will be applicable to the card or not.
Late Payment Charges
If in case you don’t make your credit card bill payment on time then the bank will charge a late payment fee. For example, if you are liable to pay Rs. 10,000 then the late payment fee might be Rs. 500 therefore it’s essential to pay your bills on time to avoid these charges. Using a credit card app in India can help you to set reminders and ensure you never miss a payment.
Over-limit Fee
Sometimes you might spend more than your given credit limit allowed to you by the bank. If your credit card issuer permits this then you will have to pay an over-limit fee. This fee is usually a flat amount that is Rs. 500 but it can vary depending from bank to bank. Therefore it’s a good idea to keep your spending within your credit limit in order to avoid these fees. Many credit card apps in India allow you to set alerts that will help you to manage your spending and avoid going over your credit limit.
Foreign Currency Mark-up Fee
The bank charges a foreign currency markup fee when you use your credit card for purchases in a foreign currency. For instance, if you spend $100, the bank will convert this amount to INR based on the exchange rate, and then a markup fee will be added that could be around 2-3.5% of the amount. If you are frequently making international purchases or traveling abroad then it’s essential to consider this fee when choosing a credit card in India.
Interest Rate (APR)
The Annual Percentage Rate (APR) is the interest charged on any outstanding balance of your credit card if you don’t pay your full credit card bill each month. Credit card interest rates are generally higher than other types of loans like personal loans, home loans, etc. For example, if your credit card outstanding amount is Rs. 10,000 and you only pay Rs. 5,000, then the interest will be charged on the remaining Rs. 5,000. The rate of interest is usually between 33-42% per year. So, it’s important to understand the APR of your credit card in India before applying for a credit card.
Choosing the Right Credit Card in India
Now you have seen the various fees associated with credit cards. It’s time to choose the right card for yourself. We would recommend Bajaj Finserv Cards which offers you many competitive features and benefits. Here are some of the tips that will help you to make the best choice while using a credit card in India:
Check the Eligibility Criteria
Before you apply for a credit card, make sure you fulfill the eligibility criteria, such as age, income, and employment status. Different credit cards have different requirements depending on their features and credit limit. So it’s essential to check the eligibility of the card and avoid being rejected. Rejections for the credit card applications can negatively impact your credit score, so it’s better to apply for a card that matches your income.
Know the Different Types of Credit Cards
There are various types of credit cards available in the market and each card offers different benefits. If you are applying for credit cards for the first time then you should start with a basic card that has no joining fee or a minimal annual fee. This way you will learn to manage a credit card without incurring any added costs. As you become more confident you can upgrade your credit card that offers more rewards and benefits.
Compare Interest Rates
Different credit cards have different interest rates and if you are planning to have a balance on your credit card then choosing a card with a lower interest rate would be suitable. This will help you save money on the credit card if you are incapable of paying your balance in full each month.
Understand the Credit Limit
It’s important to choose a card with a high credit limit so that you can fulfill your spending needs. If you have a high spending capacity then should apply for a card with a higher limit. But always be cautious about not overspending and exceeding your credit limit. This can lead to over-limit fees and even affect your credit score.
Review the Fees and Charges
Make sure to thoroughly review all the fees and charges associated with the credit card are willing to apply. This includes the annual fee, cash advance fee, over-limit fee, and foreign currency mark-up fee. Knowing these fees in advance will help you choose the right and appropriate credit card.
Final Thoughts
So, you have seen the various types of credit card fees that might be applicable to you depending on the usage of the card. It is necessary to read all the terms and conditions related to the card you are applying for and make sure you don’t skip any of the mentioned conditions. In order to maintain a good credit score, you should manage spending in a very optimum way.