subject: Various Credit card charges that comes free with cards [print this page] Various Credit card charges that comes free with cards
Credit card companies attract customers into buying a credit card by offering it free of cost. Customers, several a time believe that if there is not cost involved in buying it, why not have it?
So even if I have a card sufficient to take care of my needs, I will choose for another one just because there is not cost related to it.
There are various charges that come with a credit card usage let on alone the annual charges.
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Joining and annual fee: In order to entice customers into buying a credit card, many credit card companies offer credit cards free of cost i.e. no joining fees and perhaps exemption from annual fee for a particular period say 1 year after which they will start charging an annual fee.
The joining and annual fee could range from Rs. 1,000 - Rs. 3,000 depending on the type of card.
Interest/finance costs: This is a charge well know among credit card users. It is primarily the interest rate levied by the credit card company on the outstanding amount if it is not repaid before the expiry of the due date. This charge can range anywhere between 2.5 Percent- 4 Percent per month which in annualized percentage rate (APR) turns out to be as high as 30 Percent - 48 Percent.
Duplicate Statement Charges: While monthly statements are delivered free of cost to the address of the card holder, request for a duplicate statement in the physical form attracts charges which is typically a fixed sum.
Some credit card issuers also charge for a duplicate e-statement.
Late payment charges: Every time you make a late payment, over and above the interest rate charged, credit card companies will charge a late payment fee which can either be a fixed sum or a certain percentage of the minimum outstanding balance with a minimum and maximum threshold. It varies from one credit card company to another.
Cash withdrawal: Cash withdrawal is withdrawing money from the bank against your credit limit. Credit card companies charge individuals for cash withdrawal on the credit card. The charges could be a certain percentage of the transaction value or a fixed sum.
Overdraft Limit: Credit card companies charge an overdrawn fee if the customer exceeds his credit limit. This fee is normally a certain percentage of the overdrawn amount subject to minimum and maximum amount.
Outstation cheque fee: For the purpose of payment, if you have issued an outstation cheque, the credit card issuer will charge you a fee for it which is a certain percent of the cheque value subject to a minimum amount.
Cheque Return/ ECS return charge: In case of a cheque bounce or a failure of ECS, a fixed amount is charged by the credit card issuer.
Foreign currency transactions: In case of transactions outside the country, the same is converted into Indian rupee at a rate suggested by the network infrastructure provider (Visa/Master).
Petrol Transaction and Railway Ticket Purchase Fee: Petrol transaction is levied as a particular percentage of the transaction value subject to a minimum amount. E.g. 2.5 Percent of transaction value subject to a minimum of Rs. 10.
Service Tax: Expenses on the credit card are subject to service tax of 12.24 Percent which is levied on the total value of the transaction inclusive of fees, interest and other charges.
At the time of issue of credit card, the issuer needs to provide a document containing the terms and conditions governing credit card operations.
