Credit cards have become a necessity as they help you avoid carrying cash. Many individuals go for credit cards which have no annual fees. However, do you know there are many other fees and charges which are involved in credit card transactions.
Look at fees and charges involved in using credit cards:
1) Cash advance or transaction fees
Most of the credit card issuing banks, levy some fixed amount on cash withdrawal against the available credit limit. However, some others allow free withdrawal.
2) Overdraft fee
On exceeding the credit limit available on the issued credit card, banks charge an overdraft fee. The charges for such a fee are usually a per cent of the overdrawn amount with a minimum and maximum limit.
3) Late payment charges
Late payment charges are either fixed or are charged as a per cent of the minimum outstanding balance with a cap of minimum and maximum late payment charges.
Payment of credit card dues at a later date means after the due date attracts late payment charges and the rate of such charges varies from banks to banks.
4) Duplicate statement charges
Request for a credit card for period beyond 3 months in certain cases is also subject to levy of some amount.
5) Foreign Currency transactions
If a credit card is used for any international transaction it attracts a certain percentage as a charge subject to a minimum amount. For instance, 3.5 per cent of the transaction is subject to a minimum of Rs 250.
6) Fuel and railway booking surcharge
Such transactions also levy charges on some select cards and is usually some fixed per centage of the total transaction value with some minimum amount.
Say for example, Axis Bank levies a 2.5 per cent charge on fuel cess. (it is waived for fuel between Rs. 400 and Rs.4,000). Maximum benefits upto Rs. 400 per month.
7) Service tax
Currently, charged @14.50%, service tax is computed on the interest amount and any late payment fees.