Getting a credit card is often one of the prime milestones of acing adulthood, for it is a sign that you are all set to manage your finances independently. As great as that is, with a credit card comes responsibilities and various charges one may be unaware of.
Once you have complete knowledge of the hidden charges, you can be a credit card owner who is at ease –
- Annual maintenance fees: A number of banks offer their customers free credit cards. This usually means that the joining fee as well as the annual charge is waived off for the period of first 365 days. Post that, the annual maintenance fee kicks in. It is wiser to check and confirm in advance whether the credit is free for the year or lifetime. Better safe than losing money.
- Overdraft charges: If you are a credit card holder, ensure that you spend within your means. Simply put, do not exceed the limit assigned to your credit card, for it comes at a cost. Whether you cross the limit by a rupee or a mile, you are still bound to pay the minimum amount of INR 500. This may vary from bank to bank, but the overdraft fine shall remain.
- Charges on cash withdrawal: While credit cards offer customers the option to withdraw money from an ATM using the card, it doesn’t do so cheap. Such a transaction may entail a charge as high as 2.5% of the amount withdrawn, along with the interest charged on it, right from the minute the transaction is made.
- Goods and Services Tax: Otherwise known as the GST. All credit card transactions are subject to GST, charged at 18% of the credit card fees.
- Late payment fine: It is always wise to pay your credit card bills on time as the alternative would be paying late fees. Banks charge a flat fee when credit card holders fail to pay the minimum due amount in time, and late payments have a direct impact on the credit score. Download the CRED app today, and pay all your credit card bills on time.
- Interest Rates: Another downside of not paying the credit card bills on time is that you end up paying additional interest incurred on the card. On a monthly basis, it may seem like a nominal amount, however when calculated on a yearly basis, it can make you feel the pinch.
In other words, owning a credit card alone isn’t enough, and as a credit card holder, one would need to be aware of where the money is being spent. With CRED – a transparent and fully digital platform – you will not only be reminded to pay your credit card bills on time but also keep a track of all the hidden costs. Download CRED today, available on iOS and Android.