Credit cards make spending effortless, and when used wisely, they can also unlock many rewards. While some cards are ideal for perks like airport lounge access, others cater to everyday expenses. But there's one important factor that often goes unnoticed — hidden charges.
These fees aren't always obvious, but they can quietly add up, increasing the cost of using your credit card. Understanding them is key to managing your cards smartly.
Here's a breakdown of 5 common hidden charges you should watch out for.
Joining and annual fees
Many credit cards in India come with joining and annual fees, which cover the rewards and privileges offered by the cards. The joining fee is a one-time charge when you first acquire the card. The annual fee is a recurring cost for keeping the card active. It can range from a few hundred to several thousand rupees, depending on the type of card. Always read the card's terms and conditions carefully to understand these costs before signing up.
Late payment fees
If you fail to clear your credit card dues on time, you will incur a late payment fee. This fee varies between credit cards and may be either a fixed amount or a percentage of the outstanding balance. To avoid it, ensure you at least pay the minimum amount due by the due date.
Overlimit fees
Exceeding your credit card limit results in an overlimit fee, which applies to the billing cycle in which you surpassed the limit. To prevent this, regularly monitor your spending. If required, request a credit limit increase from your card provider.
Foreign transaction fees
When you use your credit card for transactions in a foreign currency, a foreign transaction fee applies. This is usually a percentage of the transaction amount. To avoid this charge, consider using a multi-currency forex card or a credit card that offers zero foreign transaction fees.
Cash advance charges
Although you can withdraw cash from an ATM using your credit card, doing so incurs a cash advance fee. This is usually a percentage of the amount withdrawn. Also, finance charges apply from the date of withdrawal until the amount is fully repaid, making cash advances an expensive option. To avoid unnecessary financial strain, it is best to refrain from using credit cards for cash withdrawals.
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