Types of Credit Card Charges You Should be Aware of

Get Kotak League Platinum Credit Card & earn 8X reward Points on your every spends of Rs.150 across all categories.
Know More
Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.
By clicking on the hyper-link, you will be leaving www.kotak.com and entering website operated by other parties. Kotak Mahindra Bank does not control or endorse such websites, and bears no responsibility for them.
At your request, you are being re-directed to a third party site - https://www.billdesk.com/pgmerc/kotakcard/ wherein you can make your payment from a different bank account. Kotak Cards does not guarantee or warrant the accuracy or completeness of the information, materials, services or the reliability of any service, advice, opinion statement or other information displayed or distributed on the third party site. You shall access this site solely for purposes of payment of your bills and you understand and acknowledge that availing of any services offered on the site or any reliance on any opinion, advice, statement, memorandum, or information available on the site shall be at your sole risk. Kotak Cards and its affiliates, subsidiaries, employees, officers, directors and agents, expressly disclaim any liability for any deficiency in the services offered by BilIDesk whose site you are about to access. Neither Kotak Cards nor any of its affiliates nor their directors, officers and employees will be liable to or have any responsibility of any kind for any loss that you incur in the event of any deficiency in the services of BiIIDesk to whom the site belongs, failure or disruption of the site of BilIDesk, or resulting from the act or omission of any other party involved in making this site or the data contained therein available to you, or from any other cause relating to your access to, inability to access, or use of the site or these materials.
Note: Available in select banks only. Kotak Cards reserves the right to add/delete banks without prior notice. © Kotak Mahindra Bank. All rights reserved
By clicking on the hyper-link, you will be leaving www.kotak.com and entering website operated by other parties. Kotak Mahindra Bank does not control or endorse such websites, and bears no responsibility for them.
By clicking on the hyper-link, you will be leaving www.kotak.com and entering website operated by other parties. Kotak Mahindra Bank does not control or endorse such websites, and bears no responsibility for them.
By clicking on the hyper-link, you will be leaving www.kotak.com and entering website operated by other parties. Kotak Mahindra Bank does not control or endorse such websites, and bears no responsibility for them.
By clicking on the hyper-link, you will be leaving www.kotak.com and entering website operated by other parties. Kotak Mahindra Bank does not control or endorse such websites, and bears no responsibility for them.
20 DECEMBER, 2021
Credit cards have become a requirement for modern-day lifestyle necessities. Cardholders can pay for products in full or convert the outstanding amount into easy EMIs.
Anyone can apply for credit card with very little paperwork and there are different types of credit card charges that you can avoid if you have the knowledge.
Different Types of Credit Card Charges
Cash withdrawals from ATMs using credit cards are subject to cash advance fees of roughly 2.5 percent of the amount withdrawn. This price, combined with interest charges, presents a compelling rationale for avoiding cash withdrawals via credit cards.
Fee for late payment
If you have not paid the minimum amount due on your credit card account by the due date, late payment fee will be charged depending on the credit card issuer and the amount owed. However, this penalty is waived for those who pay the minimum amount owed but do not refund the total bill amount.
You can pay the bill online or set up instructions for recurring payments to ensure that you never miss a payment. It will also help to maintain your credit limit.
Interest Charges
If you cannot pay the total amount by the due date, you will be charged interest. In addition, all new transactions and outstanding dues will be subject to credit card charges. The charges can be as high as 3.75 percent per month.
Joining Charge
If you wish to apply for credit card, you'll have to pay a joining fee as a one-time fee. It varies depending on the bank and the type of card you want to get. There is also usually an annual fee charged by the credit card company. However, some banks do not charge an annual fee in the first year.
Over-the-Limit Fee
Your credit limit is determined by the type of credit card you choose. If you spend more than the credit limit, your bank will charge you an over-the-limit fee, which can be as high as 2.50 percent of the amount spent.
Fee for foreign currency conversion
When you use your credit card for overseas transactions, credit card issuers levy a foreign currency markup fee of 1.99-3.55 percent.
As a result, cardholders that make frequent international transactions should consider forex cards, which charge no markup on foreign transactions conducted within the jurisdiction of the loaded currency.
These cards can also be topped up according to one's needs. In addition, multi-currency forex cards are available for those travelling to multiple currency jurisdictions during the same trip.
These cards allow the users to load money in various foreign currencies on the same card, depending on their needs.
Charges for financing
If you have not paid off your credit card debt in full, you'll be charged finance charges. Unpaid bills are subject to steep financing charges ranging from 23 to 49 percent.
Cardholders who cannot pay their entire bill or a portion of it should instead convert it to EMIs.
Making cash withdrawals from ATMs with your credit card will incur financing costs from the withdrawal to the time of reimbursement. As a result, credit card holders should avoid using their credit cards to withdraw money from ATMs as much as possible.
GST
All credit card transactions are subject to the Goods and Services Tax, or GST. For banking and financial services, the GST rate is now 18%.
Annual fee charges
Consider an annual fee in the same way as a membership cost. When you apply for credit card, you can choose a card without an annual fee. This is one of the several features that credit cards may offer, for example, rental vehicle insurance coverage, etc.
Fees for replacing a card
Accidents can happen and your credit card can be destroyed or lost for no reason. In such a case, you'll need a replacement credit card if yours is lost or damaged. As a courtesy, most credit card companies will provide you with a one-time replacement card at no cost. However, if you require it urgently, you may be charged a replacement or a premium for expedited shipping.
If you know your physical card is secure but can't dip, swipe, or touch to pay, you can upload it to a mobile wallet and utilize the account that way. For urgent requirements, make sure you have a backup payment option (or two), so you don't have to spend on any extra rush fees for a replacement card.
Bottom line
Credit cards are a tool, and they must be handled with prudence, just like any other instrument. However, you can savor the benefits of credit cards without managing the difficulties if you avoid hidden fees.
You have already rated this article
OK