Credit card charges and penalties you should be aware of

A credit card gives the freedom to purchase anything with the flexibility to pay later. It comes with several benefits, such as rewarding points, discounts on brands and cashback. However, whenever you are using the card, you need to be aware of the credit card charges too. The associated charges are very high and, if not taken care of, can be hefty on pockets.

Joining fees is the one-time initial fee cost charged at the time of card issuance, whereas the annual fee is charged every year. The renewal fee is charged at the time of the card’s renewal after expiry. It can vary widely depending on the card type.

Some card issuers also waive these fees on spending beyond a threshold through a credit card within the pre-specified period.

Credit card issuers levy finance charges on failing to repay outstanding credit card dues in full. The unpaid bill amount attracts hefty finance charges in the range of 23-49 percent. Making cash withdrawals from ATMs through credit cards also attracts finance charges right from the day of withdrawal till the repayment.

ATM cash withdrawals through credit cards also attract cash advance fees of around 2.5 percent of the withdrawn amount.

Failure to repay the minimum amount due to the credit card bill by the due date attracts a late payment fee of up to Rs 1,300, depending on the credit card issuer and the bill amount. Those paying the minimum amount due but failing to repay the entire bill amount are, however, spared from this penalty.

Card issuers charge this fee when the credit card dues of their cardholders exceed their sanctioned credit limit. Most credit card issuers charge 2.5 percent of the over-limit amount, with the minimum fee being Rs 500.

Credit card issuers charge a foreign currency markup fee of 1.99-3.55 percent on using credit cards for overseas transactions, both online and offline. Hence, cardholders making frequent overseas transactions should opt for prepaid forex cards as these cards levy zero marks up fees on foreign transactions within the jurisdiction of the loaded currency.

All credit card transactions are taxed as per the prevailing rates in the country. GST is levied on the annual fee, interest payments and processing fees on EMIs.