There is no denying that having a credit card simplifies your life in a variety of ways, whether it be because they are practical, recognized everywhere in the globe, offer rewards on nearly all transactions, provide incredible discounts and deals on your favorite brands, or raise your credit score. Customers are also given access to a variety of credit card options, from which they can choose the one that best suits their needs. Many credit cards on the market right now advertise that they are free credit cards, but a borrowed item, like a credit card, is never truly free. There are many hidden charges on credit cards that most people are not aware of but should be.
Hidden Charges On The Credit Card:
The annual fee is the fee that your credit card issuer charges you on yearly basis, yet it is not something of a hidden charge, almost all credit cards, whenever and wherever advertise, clearly state the annual and joining fee of the credit cards. However, many credit cards offer credit cards on zero annual fees, but most of the time the catch is that this usually applies only to the first year; following that, customers will be required to pay an annual fee. As a result, it is best advised that you carefully read the terms and conditions of the credit card you are considering.
Charges for ATM withdrawals:
A credit card is very convenient, and a very helpful financial tool, the option to withdraw cash whenever you need it is one of the numerous advantages of having a credit card. However, as pleasant as it sounds, it is almost never advisable to withdraw money from an ATM due to the high fees associated with doing so. The interest is charged on the withdrawn amount which is around 2-3%.
Charges for redeeming rewards:
Many people use credit cards for the rewards it offers on their transactions. A credit card that offers unbelievable rewards is an instant pick, however, what most people fail to know beforehand is that many credit cards charge fees for redeeming your collected rewards. Lenders charge their customers when they use reward points to redeem them, regardless of whether the awards are any items or vouchers.
Charges for Foreign Transactions:
When considering credit cards’ advantages, their global acceptance always ranks as their top perk, but it is rarely mentioned that they also have fees associated with it. Yes, a foreign transaction fee will be charged to your credit card if you use it to make a purchase in a foreign country. This sum, which represents around 3% to 5% of the total foreign transaction, would next be converted to Indian rupees using the currency rate that would be in effect at the time.
Exceeding Limit Charges:
When you receive a credit card, it comes with a specific line of credit, which is the highest credit amount that you are allowed to spend in a certain period of time. Users may or may not be allowed to go over the predetermined spending cap based on the type of credit card they have. Lenders do not let something like that without charging cardholders a hefty amount as an over-limit fee. It is therefore strongly advised that you become acquainted with such fees in advance rather than finding out about them later in life, perhaps when you are paying this particular costly fee.
Late payment fees:
At the end of the billing cycle, cardholders are required to settle the balance in full, however, they are also given an option of paying the minimum amount if they somehow are not able to settle the balance in full. But if they do not pay even that minimum amount and miss the payment or make the payment later than the given deadline then the issuer will charge them a late payment fee. Apart from paying extra money in the form of charges, late payment fees also has a negative impact on your credit score, a missed payment remains on your credit report for up to roughly 7 years.
Fee for balance transfers:
Although many credit cards provide the option of a balance transfer, they rarely mention the fact that these transfers also include certain fees. You may have to pay a balance transferring fee if you wish to move balances across accounts. Typically, the cost is a portion of the money you move.
Read More: Ways To Maximise The Benefits Of Credit Card
Using a credit card requires discipline and correct knowledge of this plastic money because if done correctly, credit cards can prove to be a very useful financial instrument for you, that is if you completely understand how to make them work for you rather than against you. The first rule is to know everything related to the card you are picking, and read the terms and conditions thoroughly before committing to anything.