Understanding Credit Card Fees: Everything You Need to Know

Credit cards have made payments extremely convenient in recent years. You can make purchases instantly and pay for them later — all the while earning rewards and benefits in the process. However, on the other side of the coin, there are credit card fees that you need to be mindful of when you apply for and use your preferred cards. 
 

9 Credit Card Fees You Should Be Aware of 

Credit cards issued by most leading credit card issuers in India carry the following types of credit card fees.

1. Joining fee 

This fee is payable when you apply for a credit card. However, many credit cards waive the joining fee if you meet the desired spending limits within the first 30 days from the date of card issuance (or any other period, as specified by the card issuer).

2. Annual fee 

The annual fee is a recurring credit card charge that you need to pay each year to continue using your credit card. Like the joining fee, the annual fee may also be waived on some credit cards if you meet the required spending limits in the previous year.

3. Finance charges 

Finance charges, also known as interest charges, are levied on the credit card balance that remains unpaid past the due date. The interest rate may range from 2% to 4% per month (or more).

4. Late payment fee 

The late payment fee is levied if you do not make your credit card bill payment within the due date. However, if you pay the minimum amount due, this fee can be avoided.

5. Over-limit charges 

Ever wondered what the over-limit fee on a credit card is? As the name indicates, this is a type of credit card charge levied if you make purchases exceeding the card limit.

6. Foreign transaction fee 

Also known as forex charges, foreign transaction fees are levied on payments and purchases made abroad using your credit card. Some credit cards offer the benefit of low or no forex fees.

7. Cash advance fee 

You can use your credit card to withdraw cash from an ATM against your credit limit. To avail of this facility, you need to pay a cash advance fee, also known as a cash withdrawal fee.

8. Payment dishonour charges 

In case the payment you make towards your credit card bill cannot be completed on account of a dishonoured cheque, the card issuer will levy payment dishonour charges accordingly.

9. Charges for reissue of lost credit card 

If your credit card is lost or stolen, you can place a request for a new card to be reissued. In return for this service, you will have to pay the required charges for the reissued card.

Minimise Card Charges, Maximise Rewards with Fi 

To make the most of your credit card, you need to take efforts to minimise the credit card charges and maximise the rewards and benefits earned. Fi Money makes this extremely easy. 

If you're looking for a credit card that gives you the best bang for your buck, the Fi-Federal co-branded credit card is what you need. With this card, you're assured of a 2% valueback through rewards. But that's not all, as you'll also get 5x on your top 3 brands, 2x on all partner brands listed in the Fi Catalogue (including Amazon, Netflix, etc.) and 1x on everything else, including rent and fuel. What's unique is that you earn points through Fi-Coins. For travellers, the perks are even better, as you can convert your Fi-Coins to airline miles or cashback.

Frequently Asked Questions 

1. How do I know if my credit card fees are worth it?

To understand if your credit card fees are worth it, compare the card’s charges with its benefits. If the total value of all the benefits received via cash backs, discounts, rewards and/or air miles exceeds the credit card fees, you can consider the card worth keeping.

2. What do the typical fees on a credit card include?

The typical credit card charges include joining fees, annual fees, interest charges, late payment fees, over-limit fees, foreign transaction charges and cash advance fees.

3. How do credit card fees work?

Credit card fees are typically levied on various specific services or actions taken by the cardholder. Some fees, like the joining fee and annual fee, are unavoidable unless they are waived. Other charges, like the cash advance fee, foreign transaction fee and balance transfer fee, are levied on specific services. Meanwhile, some charges like the over-limit fee, interest and late payment fee can easily be avoided if you use your card prudently.

4. Do you get charged a fee every time you use a credit card?

No, you do not have to pay any fee each time you use a credit card. However, some retailers and vendors may charge a processing fee from the buyer.

5. How can I lower my CC interest rate?

You may be eligible for lower credit card interest rates if you improve your credit score and repay your dues on time.