Credit Cards Hidden Charges: Check The Charges Now

A credit card allows you to buy anything and pay for it later. A credit card, although useful for making purchases and getting rewards, comes with its own set of responsibilities. It also looks to be quite appealing for establishing credit history. While a bank may advertise that credit cards are free, customers should be aware that the cards come with a few "hidden costs." Most of you are just concerned with the annual fee, but there are a few additional credit card fees to be aware of.

What is a Credit Card?

A credit card is a type of credit facility provided by banks that allows customers to borrow money up to a certain credit limit. It enables clients to purchase goods and services. The credit card issuer establishes the credit limit based on variables such as income and credit score, both of which are determined by the credit card issuer.

Here are some hidden charges on credit cards-

Annual Maintenance Charge

This is not a hidden price and is commonly referred to as an "annual fee." The annual fee is collected once a year and varies with each card. Banks will occasionally provide free credit cards, which have no joining or yearly fees for a specified length of time or lifetime.

Cash Advance Fee

A 'cash limit,' which limits your ability to withdraw cash from ATMs using the credit card, is included as part of the overall credit limit on the credit card. This cash withdrawal or cash advance transaction is costly, costing up to 2.5% of the withdrawn amount. Cash advances are subject to interest from the day the transaction is completed, and credit card cash withdrawals are not subject to the interest-free period.

Over-limit Fee

Depending on the sort of credit card you use, exceeding the spending limit may or may not be authorised. For such "exceeded limit" transactions, banks levy a substantial "over-limit fee." Usually banks charge a minimum of $500, however this varies depending on how much you have exceeded your credit limit.

Late Payment Charges

Banks enable you to pay a minimal amount if you are unable to pay the total outstanding debt on your credit card. If you cannot pay even the minimum amount, the bank will charge you a "late payment fee." The cost is calculated using your statement balance.

Foreign Currency Mark-up Fee

Although credit card issuers promote that their cards are accepted worldwide, they never reveal that there will be extra costs for overseas transactions, sometimes known as a foreign currency mark-up fee. The fee varies depending on the card and is often levied as a percentage of the transaction value.

GST

The Goods and Services Tax, or GST, applies to all credit card purchases, and the current GST rate for banking and financial services is 18%.