What are the different types of Credit Card charges?

Before getting a credit card, it is imperative you check the different charges it attracts. Read on to understand what they are

Credit cards are incredibly convenient and useful. They help make purchases, avoid cash transactions, and establish a positive credit history. The right credit card can also save money, although you must understand the different credit card charges for that. When interest is added in, using credit may be less convenient because it involves paying more over time. Here are some credit card charges that you should know.

Types of credit card charges

Before getting a credit card, look out for these fees in the terms and conditions:

Credit card cash withdrawal charges

You must give heed to how you pay your bills. A cash processing fee of roughly ₹100 will be charged if you withdraw cash at a bank branch or at an ATM. You must pay a processing fee between ₹25-100 if you use an outstation cheque, which varies based on the value of the cheque and the card issuer.

Finance charges in credit card

You will be charged interest if you do not clear your credit card debt in full every billing cycle. Your annual percentage rate (APR) is indicated on your cardholder agreement. Most credit cards have variable APRs that vary with the bank rate, but others have fixed APRs that do not alter with the bank rate. However, because your APR is likely fluctuating, check your online account or most recent bill each billing cycle to see what APR you are being charged. Your credit card finance charges will depend on the kind of APR you are being charged.

Credit card swipe charges

When customers pay with a credit card, banks and card networks tack on a "swipe fee" to handle the process. Credit card fees are typically around 2% of the transaction value. However, some premium rewards cards charge as much as 4%.

Credit card charge to the customer

If you apply for a credit card but never use it, you must still pay the annual fee. It is the credit card's maintenance fee. The cost will differ depending on the type of card used. Regardless of whether you use the card or not, you will be charged an annual fee. Hence, it is better to look for a zero annual fee credit card.

Credit card late payment charges

If you do not settle your credit card debts on time, you will be charged interest on the outstanding balance. Credit card interest rates typically vary from 22-48% per year. If you owe ₹10,000 on a credit card and the monthly interest rate is 3.25% (39% yearly), and you fail the payment date, you will be charged a fee equal to one-tenth of the loan amount.

Credit card ATM withdrawal charges

Banks permit a cash limit of 20% of the entire permissible credit limit on the card. You can draw money from an ATM up to this amount. A cash advance fee on credit cards is levied, which is calculated as a proportion of the sum withdrawn. Cash withdrawals are also not available for the interest-free period, which means they are subject to finance fees from the date of withdrawal.

Reward redemption handling fee

Many major credit card companies charge a reward redemption fee when you utilise your reward points for a transaction. Many credit card companies charge a one-time reward redemption fee of ₹99 plus GST.

Credit card transaction charges

A cost levied by payment processors to execute a credit card transaction is known as a credit card processing fee. Typically, the cost is levied against the retailer who employs payment processing solutions. The credit card processing charge is determined by credit card networks and fluctuates from one service provider to the next. The processing fee charged to a store is determined by many factors, including the technique used to accept credit cards.

Cardholders must know about their credit card charges. The knowledge helps them avoid paying extra fees, which saves money. You can consult your credit card provider and know the best way to avoid making extra payments. Credit card holders at IDFC FIRST Bank are regularly assisted with the right information for saving money and using the credit card the right way. Additionally, customers enjoy the low convenience fee and competitive interest rates offered by the bank.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.