Home > Credit Cards 

How to Avoid Common Credit Card Fees

Every good thing comes with a price, and credit cards are no exception. While a credit card provides a large number of benefits and rewards, it also comes with additional fees and charges.

Regular charges

These charges are quite common, and include annual fees and finance charges. However, there are a number of areas in which you can minimise the regular charges on your credit card.

  • Finance charges

  • These are charged on a regular basis. An interest is charged on the existing balance of the credit card. The interest rates are usually tiered and vary between 15% p.a. to 18% p.a. with 15% p.a. being the lowest interest rate applicable. In case you miss one payment, you shall be charged an interest rate of 16% p.a. to 17% p.a. For more than two late payments, the interest increases to 18% p.a.

    These charges are reflected in your monthly statements. To avoid paying more, make sure that you make payments on time. Interest rate shall increase from one tier to the next tier with late payments. You can also opt for low interest rate credit cards to avoid paying high finance charges.

  • Annual fees

  • Annual fees are charged on your credit card once a year. While most cards offer an annual waiver on the card, charges such as SST might still be included. However, you can always choose a card with no annual fees and still enjoy a number of rewards and benefits.

Service related charges

These charges are related to the various services that you choose to apply for. These include services such balance transfer fees, overseas transaction fees, and cash advance fees.

  • Balance transfer fees

  • Balance transfer refers to the particular service where debts from other credit cards are consolidated into one and are paid off at a lower interest rate. While you are saving on the usual finance charges on the credit card, there are a number of associated fees and charges, which need to be paid for the balance transfer plan. It is important to compare the different rates of balance transfer being provided by different banks. You can also make the best use of an offer that might be applicable for balance transfer. For example, choose a plan with a shorter tenure so that the effective amount of interest paid is much lower. It is also advisable that you do not take balance transfer services too frequently, as they negatively impact your credit score.

  • Overseas transaction fees

  • Overseas transaction charges are applicable every time you use your credit card abroad. These charges are applicable on every transaction that you make, including retail and online transactions, cash withdrawals, and any other transactions. It’s advisable to use a credit card with overseas transaction benefits.

    Invest in a card which provides cashback, reward points, and other benefits for overseas transactions. Make a comparison of different cards if applying for a new card and understand all the charges that may be applicable overseas.

  • Cash advance charges

  • It’s charged on your credit card cash withdrawals. The rate may vary from one ATM to another. You can save on these fees if you withdraw money from the bank’s registered ATM. Extra fees are saved when you restrict yourself from taking out money from ATMs of non-affiliated banks and ATMs located overseas.

Payment behaviour charges

These are charges that you can completely avoid on you part, and are based on the way you maintain your credit card payment behaviour. These include late payment charges and over limit fees.

  • Late payment charges

  • It pays to make regular payments. You can save on a lot of money when you make payments regularly and on time. Most banks shall put a premium when you miss your monthly deadline for payments. With a good credit habit, you can save more money. Try to pay more than the minimum amount per month as well, and make payments more than once in a month.

  • Over-limit charges

  • Make sure you know the credit limit offered by your credit card. These fees are charged when you shoot beyond the limit provided. One thumb rule for measure is to not use more than 30% of the credit limit provided. This habit shall also reflect positively on your credit score.

Other charges

  • Replacement card fees

  • In the case of loss or theft of the card, replacement cards are issued for a certain amount. You can save on the amount by going for a card which does not charge any amount for replacing the card. Make sure to maintain the safety of your card from frauds so that the need to replace your card minimises.

  • Retail transaction charges

  • It is applicable only after a window of no interest payments, and is charged on shopping transactions. You can avoid these charges by paying the bank within the window of no interest, which is usually 20 days from the date of transaction.

    Seek the help of comparison websites when choosing a card. This way you shall be able to make the most of your purchases along with a sound control over your finances.

  • Recent Posts

  • reTH65gcmBgCJ7k
    This Page is BLOCKED as it is using Iframes.