Types of Credit Card Fees in India
1️. Annual Fees:
- Most credit cards charge an annual fee. These fees vary based on the card’s category:
- Standard cards: Annual fees can be as low as ₹500. Many banks waive these fees if you meet a minimum spending requirement or for the first year.
- Premium cards: Fees for premium cards can range from ₹5,000 to as high as ₹60,000 depending on the bank and benefits.
2️. Interest Rates:
- If you don’t pay your full credit card bill each month, interest (APR) will be charged on the remaining balance. Rates in India typically range from 2% to 4% per month (or 24% to 48% annually).
- Tip: Pay your bills in full each month to avoid these charges.
3️. Late Payment Fees:
- Late fees depend on your outstanding balance. These fees range from ₹100 for smaller amounts to over ₹1,200 for larger balances.
- Always review the Most Important Terms and Conditions (MITC) of your card for details.
4️. Cash Withdrawal Fees:
- Cash advances from your credit card incur high fees, typically 2.5% to 3.5% of the amount withdrawn. Interest is charged immediately with no grace period.
- Tip: Avoid cash withdrawals unless absolutely necessary.
5️. Overlimit Fees:
- Spending beyond your credit limit results in an overlimit fee, often 2.5% to 3% of the exceeded amount.
- Tip: Keep track of your spending to stay within your credit limit.
6️. Foreign Transaction Fees:
- For purchases made in foreign currencies, you may be charged 1% to 3.5% of the transaction amount.
- Tip: Use cards with low or zero foreign transaction fees for international purchases.
Lesser-Known Credit Card Charges
1️. Card Replacement Fee:
- If your card is lost or damaged, banks may charge a fee to issue a replacement.
2️. Balance Transfer Fee:
- Some banks allow you to transfer balances from one credit card to another to take advantage of lower interest rates, but this comes with a fee.
3️. EMI Conversion Charges:
- Converting large purchases into EMIs is convenient but may incur a conversion fee, typically around ₹199 for merchant EMIs.
Tips to Avoid Unnecessary Fees
- Pay on Time: Avoid late payment fees and interest by paying your bills in full and on time every month.
- Watch Your Credit Limit: Monitor your credit usage to avoid overlimit fees. Keeping your credit utilization ratio below 30% can also help improve your credit score.
- Avoid Cash Withdrawals: Due to high fees and interest, avoid withdrawing cash using your credit card.
- Low Forex Fees for Travelers: If you travel frequently, choose cards with low or no foreign transaction fees to save on international purchases.
Stay informed and avoid unnecessary costs by knowing the fees associated with your credit card! Make the most of your credit card while keeping those extra charges in check.