Since the time credit cards made space in the tech industry, people have enjoyed its privileges, especially when buying expensive commodities. Even more so, consistently shopping through credit cards helps earn rewards for the future that might come in any form, such as a gift. But remember that credit cards are why people are afraid of disrupting their credit history.
Digital payments in India had a revolutionary effect on how people make payments, purchase high-end products and receive money. But it is also essential to understand the hidden charges or costs that make it difficult for people to keep their credit liability as low as possible. While these innovative methods are a significant transformation in monetary terms, it is crucial to have a clear picture of the credit cards one has been using consistently.
It is not just the customers who have to pay for utilizing their credit cards, but also the merchants charge pretty high credit card swipe charges. So it would be pretty safe to say that digital payments in India have got its positive and negative sides. So let’s scan through all the actual credit card charges to know about having an added advantage in maintaining a smooth credit history and reducing all sorts of liability.
Charges For Late Payment
With each month’s credit card statement that one receives, the financial institution asks the concerned party to make the payment of a specified amount. If the person does not have enough funds to make the payment, the bank also offers the liberty to pay a small sum. However, late payment charges are levied when the concerned party fails to pay the minimum fee from the card statement. It would certainly depend on the amount.
Charge for Exceeding Limit
Credit Cards are a privilege to use, but just like merchants have a hard time paying credit card swipe charges, similarly, when you overspend your credit card, the limit is bound to exceed. Remember that every card comes with a spending limit. The moment you go beyond that amount, the financial institution rightfully charges you with a specified amount as a penalty for whatever extra expense one makes through that card.
Charged for Withdrawal of Cash
Believe it or not, a specified part of the credit limit is granted in cash that a person can withdraw from the ATM. It might come as new information, but it is possible to easily withdraw some money from the ATM from a credit card during an emergency. However, the interest rate is applied instantly without granting any interest-free duration. It could go up if you do not make the payment as soon as possible.
Maintenance charges are also known as annual Fees, where a specified sum is applicable annually. Not all banks would charge for joining a credit card scheme. They would grant it free and let one go without paying any annual charges. However, it would be only valid for a few years. For others, the yearly fees continue to be charged without treating it as a hidden cost.
The Annual Percent Charges
Every credit card attracts a certain amount of Annual percent charges. It becomes a massive liability if one has an overdue amount to be paid for a very long time. The interest rate on credit cards is the biggest problem if one has no idea how to repay the loan taken from a credit card. Hence, the overdue amount must be cleared before attracting any Annual Percent Charges.
Foreign Transaction Charges
Foreign transactions using credit cards are the highest, especially when one thinks of withdrawing cash in an overseas country. The credit card swipe charges are high, and so is the interest rate on the cards, depending on the bank. But it usually ranges anywhere between 1.5% to 5%. So make sure to carry enough cash when traveling in a foreign country.
Digital payments in India have made it easier to use Barcodes, UPIs, and credit card methods. However, every time the card is utilized, it would come with an interest rate, processing charges as one applies for No cost EMIs or even the annual charges. On top of all these expenses that come as a liability for the owner of a credit card, GST is an added expense levied as a fee.
Credit cards are meant to make spending wholesome and uncomplicated. But do not go on a crazy shopping spree to cost you more money than you spent.
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