With great spending power comes the great responsibility of managing Credit Card charges. Once you get a Credit Card, you get the freedom to buy anything and pay later, but at the same time, you also ensure that the charges are not eating into your funds. As much as you put in a lot of effort to know the benefits, it is equally important to know how to apply for a Credit Card and enquire about the charges a bank may levy:
- Interest rates
Using a Credit Card, you can spend the money available according to your credit limit and pay it back before the due date. If you cannot pay the total amount by the due date, you are charged interest on the outstanding dues as well as on all new transactions.
- Penalties
If your Credit Card bill is unpaid for more than 60 days, you are charged penalty interest or overdue interest, which is levied by your bank or Credit Card company. It is also called a late fee for Credit Cards and is charged based on the outstanding bill amount.
- Annual fees
Popularly known as annual maintenance charges, annual fees are not hidden charges. It is charged once a year, and the amount can vary between banks. If you are offered a free Credit Card with no joining fee or annual fee for a certain period or lifetime, you need not pay any annual fees. However, check the Credit Card eligibility and terms offered by the bank before accepting them.
- International charges
Banks often advertise that their cards are globally accepted but do not reveal that there is a cost associated with it. You are charged extra fees for foreign transactions, which is also called a foreign currency mark-up fee. It is usually charged as a percentage of the transaction amount and can differ from one card to another.
- ATM withdrawal charges
You can withdraw money from ATMs up to your permissible cash limit using your Credit Card. But you will be required to pay a cash advance fee which is calculated based on the amount of money withdrawn.
- Overlimit fees
You are assigned a particular credit limit depending on the type of card you choose when applying for a Credit Card. If you spend using your Credit Card beyond the limit, your bank will charge you an over-limit fee of around 2.5% on the over-limit amount. However, this percentage varies according to the bank.
- Late payment charges
If you do not pay your outstanding bill, your bank notifies you to pay the minimum amount. Almost all banks charge Credit Card late payment charges.
Conclusion
A Credit Card will be beneficial when you understand how to maximise the value of your spending while meeting your financial requirements. Evaluate your needs and financial profile before applying for it.
