Know all costs before you swipe a credit card

After demonetisation, people are expected to use plastic money more than ever before. But, as the Banking Codes and Standards Board of India (BCSBI) has pointed out in a recent report, a free credit card is a myth. Customers should go through the “most important terms and conditions” document given along with the credit card and familiarise themselves with all the charges levied on it before beginning to use it.

• When a customer is offered a ‘free’ card, it means that the joining fee and the annual fee for one year have been waived. Check whether it is indeed a ‘lifetime free card’

• If you pay only the minimum amount each month, the interest charge on the balance is exorbitant 

• If you exceed the monthly credit limit on your card, you have to pay an overdraft charge

• If you withdraw money from an ATM using a credit card, you have to pay a transaction charge and an interest charge

• Late payment charge is a flat fee, independent of interest charge, and is levied when you fail to pay your monthly dues by the due date

• Using a credit card to buy petrol or rail tickets attracts additional charges

• Foreign transaction charges are levied for every overseas transaction made on a credit card

• If you use outstation cheques to settle your credit card dues, that attracts an additional charge — a fixed percentage based on the slab in which the bill amount falls 

• If the cheque you issued to pay your credit card bill bounces, you have to pay a charge

• If you lose your credit card, you have to pay a charge for the new one    

 
Source: BCSBI