In today’s time, credit card has become an important part of people’s daily needs. It proves to be very helpful in shopping, online payment, travel and emergency expenses. Through this, customers also avail the benefit of many rewards, cashback and offers along with cashless facility. But if it is not used carefully, this facility can cause major financial problems. Not paying bills on time, overspending or ignoring rules can result in heavy interest and other charges. In such a situation, before taking a credit card, it is very important to understand all the rules and fees related to it.
Annual Maintenance Charge
The most common charge on credit cards is the annual maintenance fee. This is also called annual fee. According to different cards and banks, it can range from Rs 250 to Rs 50,000. Many banks offer free cards initially, but later they start charging fees. Therefore, before taking the card, it is important to know for how long the free offer will be applicable. Many times customers keep using such cards without knowledge and later have to pay heavy fees.
joining fee
Joining fee is the amount that is charged from the customer at the time of card issuance. This is a one-time charge and may vary depending on the type of card. Generally this fee can range from ₹250 to ₹50,000. Many banks charge higher joining fees on premium cards, but in return offer facilities like reward points, travel benefits or lounge access. The customer must check whether the benefits are fair compared to the fees or not.
cash advance fee
Credit card also provides the facility to withdraw cash through ATM, but this is considered one of the most expensive facilities. Banks charge about 2.5% of the amount withdrawn on every transaction. Apart from this, interest starts accruing on this amount from the first day itself. There is no interest-free period in this. This is the reason why financial experts recommend using cash advance facility only when necessary.
late payment charge
If the customer does not deposit the credit card bill on time, banks charge late payment fees. Many people pay only the minimum amount and leave the remaining amount, due to which additional interest also starts being charged on them. Continuous late payment can damage the credit score and may cause difficulty in getting loan in future. Therefore, it is always advisable to pay the entire bill before the due date.
Annual Percentage Rate (APR)
APR is the credit card interest rate. It is levied on those outstanding amounts which the customer is unable to repay on time. This interest rate on many credit cards in India reaches 33% to 42% annually. In some cases it can be up to 50%. In such a situation, even small dues can gradually turn into big debt. Experts believe that the best way to avoid this charge is to pay the entire bill on time every month.
While using a credit card, customers should not only pay attention to the offers and cashback, but should also understand the charges, terms and interest rates associated with it. If used with correct knowledge and responsibility, credit card can prove beneficial, but carelessness can turn it into a financial burden.
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