Individuals who apply for credit cards must make sure that they know about every charge and fee on their credit card, including the value of their future credit card EMI. Financial advisors and card-issuing banks advocate a conscious effort for credit cardholders to understand their repayment cycle as an effective way to minimize a piling-up of credit card debt.
To know your repayment cycle better, you must acquaint yourself with all credit card charges. Read this article to be updated with all kinds of fees on your credit card bill.
1. Cash withdrawal charges
While repaying a credit card bill, you must pay attention to the mode of repayment that you utilize. If you withdraw cash at an ATM using your credit card, your bank charges a ‘cash processing fee’ of roughly ₹100. If you decide to pay via cheque, you may need to pay an additional processing fee worth ₹25 – ₹100. These charges might vary based on the value of the cheque and the card-issuing bank.
2. Annual Fee
Certain card-issuing banks charge an annual fee from their customers for providing credit card services. It forms a crucial category within credit card charges. As a customer, you can avoid this charge by opting for IDFC FIRST Bank’s lifetime free credit cards, which do not include any annual membership charges and come with low APRs starting at just 9% per annum.
Moreover, the bank offers the lowest cash advance charges and markup fees on foreign exchange transactions. The credit card application process is completely paperless, and streamlined, and requires minimal documentation.
3. Swipe charges
Whenever you swipe your credit card at a POS (Point-of-Sale) machine to make a payment, the merchant bears credit card swipe charges, or a swipe fee to effectuate the transaction. Credit card swipe charges are generally 2% of the transaction value. Certain premium credit cards charge swipe charges worth 4% of the transaction value.
4. Annual Percentage Rate
If you fail to repay your outstanding bills on or before the credit card due date, you must bear interest charges according to the Annual Percentage Rate or APR. While most APRs vary according to the bank rate, certain banks keep APRs fixed.
5. Reward redemption charges
When redeeming reward points for a transaction, credit card companies levy reward redemption charges. Most credit card issuers charge a one-time reward redemption fee of ₹99 plus GST. However, they may vary depending on the type of credit card and the issuer.
6. Credit card transaction charges
Every time a cardholder carries out a transaction, the retailer must pay the credit card transaction fee. The credit card network companies, such as Visa, determine this transaction charge. However, if you are a business owner, you must pay the transaction fee on each successful payment collection.
To avoid any accumulation of credit card debt, you must know the details of the repayment procedure, including the value of your future credit card EMIs (Equated Monthly Instalments). Use an online credit card EMI calculator to know this value in advance.
Also read: Tips on Using Credit Cards Wisely
