What are the different charges and fees associated with credit card transactions?

Credit card, a saviour to take re-course to, in case of an urgency when an individual is not able to meet his or her financial obligations, should be carefully and diligently used. Else, you will be trapped in huge debt and your banker will then determine your stand in case of non-payment of credit card dues.

Joining Fees and Annual Fees: Some of the credit cards with different banks have different joining fees and annual fees. Annual fees for maintaining a credit card and its administration by the banker is charged on some of the cards from the second year. However, this fee is charged on some cards from the first year itself. Further, the amount of fees charged is depended on the card type.

Interest rate charges: For the credit extended, banks charge an average interest rate of 30%-45% on an annual basis or 2.49% to 3.40% per month, if the dues are not paid during the free credit period cycle. Computation of interest rate using the formula :

= (Outstanding amount * rate of interest on a monthly basis* no. of days*12months)/365 days.

Cash advance or transaction fees: Few of the credit card issuing banks, levy some fixed amount on cash withdrawal against the available credit limit. However, some others allow free withdrawal.

Overdraft fee: On exceeding the credit limit available on the issued credit card, bankers 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.

Late payment charges: Payment of credit card dues at a later date attracts late payment charges and the rate of such charges varies from banks to banks. Such 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.

In order to avoid such a charge, dues in full are to be paid on or before the due date.

Service tax: Currently, charged @ 12.36%, service tax is computed on the interest amount and any late payment fees.

Foreign currency transaction: It is another charge levied in case the cardholder performs the credit card transaction outside India. Such a charge comes with a mark up of some percentage points.

Fuel and railway booking surcharge: Such transactions also levy charges on so0me select cards and is usually some fixed % of the total transaction value with some minimum amount.

Duplicate statement charges: Request for a credit card for period beyond 3 months in certain cases is also subject to levy of some amount.

Other charges: Other than these charges, banks impose fee on return of cheque, auto-debit return fee, outstation cheque processing fee, card replacement fee, service charges (utility bill payment), cash or cheque pick up fee, handling charges for redemption of credit card reward points and chargeslip request fee among others.

Since the charges are revised on a continuous basis, you need to keep a track of the charges on a constant basis.

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