Many a times people consider Plastic Cash to be one of the greatest creations of the banking sectors all round the globe. They do provide you with its greatest benefit – “buy now pay later” scheme. Besides that the convenience of carrying plastic cash while travelling is just unbeatable in comparison with the liquid cash. Credit cards also do provide us with the facility that enable easier and quicker online shopping and ticket booking for travel, entertainment, hotels etc. But, when you receive the monthly bill, you notice an inflated amount- amount that your total expenditure might not have amounted to. Yes you are quite correct. That is the charges the bank levies to provide you with its credit service. But how much of it is bearable?
Card holders realize the additional charges to which they are indirectly responsible for only when their monthly credit card statement arrives. Therefore it is binding upon you to read and understand the MITC (Most Important Terms and Conditions) which is listed on the card issuers ‘ website very carefully, since any ignorance on this apart will leave you to pay mounting heaps of debt for which you are not responsible for. Ignoring this fact, can put you in serious situations wherein you might not be able to avail loans such as personal loan or a home loan due to a weak Credit Information Report (CIR). Therefore it is important to know what is being taken from you.
Here are some important charges you need to be aware of when you expect your credit card statement:
Cash withdrawal:
Not many people know that, their accounts can be charged a massive 2.5% of the amount that is withdrawn from ATMs. Therefore it is best if this option is utilized in case of emergencies. Apart from that you may also be entitled to pay 39-45% as interest charges on the amount you withdraw. Depending on banks, further charges may be levied if you have withdrawn from ATMs at their branches.
Over limit charges:
If you have multiple credit cards, it is important that you keep an even stricter track about your payment dates. If you fail to do so, you will be burdened with extra charges. A minimum charge of Rs 500 is what you can expect however it can go up to 2.5% of the overdrawn amount depending upon your usage.
Also, it is expected that you realize that the credit limit assigned to you by your credit provider includes any type of charges or late payment penalties that you may have to pay during your credit requirement.
Outstation Cheque charges:
Most banks follow a cheque collection policy of charging you about 1% of the cheque value per Rs 50 for any other instrument if you have chosen the option for covering terms related to outstation cheques. Some banks do waive these charges however it is mandatory for you to understand this and go through the MITC to know the charges that you are applicable for.
EMI processing charges:
At the discretion of banks and credit card issuing companies, several times customers are benefitted with an installment based payment of their outstanding amounts rather than a heavy lump sum payment. This enables credit card holders to provide for their dues with the chances of becoming defaulter closing to a minimal level. Although this may seem like a blessing, you need to ensure for any hidden charges like any kind of processing fees, change in the rate of interest etc that can be levied on such repayment of dues.
Right of lien
If in case your credit card has been issued from the same bank where you hold your account, you can utilize funds from that account to pay your credit card dues. This option is also open to add on credit card holders too.
It is important to know that, most credit card issuing companies provide this clause in their terms and conditions that clearly state that, if you as a card holder default from paying your dues, then the card issuing authorizes for the withdrawal of funds from your account to reimburse the same. Therefore in order to save yourself from such bankruptcy, make sure to pay your dues on time and keep yourself informed of the terms and conditions specified by your credit card provider.