Credit cards are a great asset as they come with multiple benefits to simplify your financial life. These powerful financial tools offer you spending flexibility, rewards on purchases, travel perks, insurance coverage, fraud protection, global acceptance, and whatnot! However, they also come with several hidden charges that might surprise uninformed users.
Let’s break down the most common credit card hidden charges and how you can avoid them to save a significant amount over the long term.
Annual fees
Annual charges are levied for the benefits and privileges that come with your credit card. These fees can vary between banks and also depend on the type of card you have. For example, basic cards might have lower or no annual fees, while premium cards with free airport lounge access, higher rewards, and other travel benefits could charge higher fees. Make sure to evaluate whether the benefits of the card justify the annual fees.
Late payment charges
Never miss or delay any online credit card payment because it could lead to late payment fees. Late payments burden you with additional costs and damage your credit score as well. This may have a negative impact on your ability to obtain loans or other credit lines in the future. If you cannot pay the whole amount due, try to pay the minimum amount due and clear the remaining amount later.
Foreign currency markup fees
Using your credit card online or offline for purchases in foreign currencies or on international sites incurs a foreign transaction fee. Also known as a forex transaction fee or a currency mark-up fee, this charge is a percentage of the total amount spent and can range from 2% to 5%. This fee covers the cost of converting a foreign currency back to the home currency.
To make your global adventures luxurious and affordable, choose the IndusInd Bank Legend Credit Card. Get a discounted foreign currency markup of 1.8% on international transactions and additional benefits like:
| Reward points | Earn 1 reward point per ₹100 spent on weekdays and 2 reward points per ₹100 spent on weekends. |
| Bonus reward points | Receive 4,000 bonus points on annual spending of ₹6 lakh or more. |
| Travel perks | Access to over 600 VIP airport lounges globally through the Priority Pass. |
| Fuel surcharge waiver | Benefit from a fuel surcharge waiver at any petrol pump in India and save more. |
| Concierge services | Access 24/7 concierge services to assist with travel, entertainment, and more. |
Simply click on the credit card apply option online and get started with IndusInd Bank today.
Cash advance fees
Credit card cash advances help you withdraw cash from ATMs. This is a convenient option to get quick cash, but this service carries higher interest rates compared to regular purchases.
Also, the interest on cash advances accrues immediately, with no grace period. This makes cash advances one of the most expensive credit card transactions, which means you should use it only in extreme emergencies.
Overlimit fees
So, what is overlimit in credit cards exactly? “Overlimit” in credit cards refers to the situation where you exceed your approved credit limit.
Credit cards usually come with a credit limit, which is the maximum amount the bank permits you to borrow on the card. If you spend above this limit, overlimit charges may apply. If you need a higher credit limit, talk to your card issuer about the possibility of a limit increase rather than risking overlimit charges.
Balance transfer fees
A balance transfer fee is levied when you transfer an outstanding balance from one credit card to another. While this strategy helps you consolidate debt and reduce interest expenses, it is important to assess the balance transfer fees to determine if the savings in interest will outweigh the associated charges in the long run.
Key takeaways
As you can see, some of the credit card hidden charges include overlimit fees, late payment fees, cash advance fees, and foreign currency markup fees. It is important to familiarise yourself with these charges in order to avoid last-minute surprises.
Most credit card hidden fees are easy to avoid. Just make sure to read the terms and conditions of your credit card agreement thoroughly, track your credit usage, and spend within your credit limit. Most importantly, apply for a credit card online with a bank that provides access to better features at lower rates and affordable fees.
