Today we are revealing an interesting topic related credit card hidden charges. When you take credit card a lot of charges are hidden that you do not know. Actually, you are becoming poor with credit charges. Warren Buffet says if you earn 18 – 20% return every year or compound every year then no one can not stop you to be rich.
Similarly, if you are paying 18 – 20% interest, every year then you will become poor. The same, a credit card is a debt whose interest rate is 36 – 40% annually. I have been using a credit card for 2 years but I don’t know some hidden charges. if you read the full article you will know what are hidden charges and avoid charges and use credit cards very smartly.
What are the credit card hidden charges
Let’s understand credit card hidden charges with an actual credit card statement. It is a real statement of my friend.
Total payment due is 42,085 or the minimum due is 23,441 from 13/01/2018 – 12/02/2018. The credit limit is 60,000 INR. The previous balance is 32,685. This month no payment, no credit, no purchase as well as not take a cash advance. Moreover, 9,400 is debt + any EMI principle charges.
Total EMI is running 5 and the total balance is 18,280 INR. Every month my friend is paying 4000 – 5000 INR.
This month no payment but what is 9400 INR charges. We are going more deeply to the analysis of these charges.
It is a full detailed statement you can see all charges.
Previous, 5 Emi we check that the total amount was 18,280 INR. Now we check what is more charges apply or what is the major changes in credit cards.
Late payment fee – First of all, the late payment fee applies if we don’t pay before the due date. You can check on the 6/02/2018 late payment fee of 700 INR. Late payment fees generally a flat fee. It is different for every card from 300 – 1000 INR.
Cash withdrawal charges – 2-3% of withdrawal charges seem according to the quantity of money. For example, if you withdraw $500 as a result $15 fee will apply.
Interest charges – These interest charges are very important to understand. Only interest charges effect on our capital. The rate of interest charges around 3 – 4 % per month (total 36% to 50% P.A). It is more expensive debt from personal, or all other loans. If they don’t pay the total due amount (42000) after interest rate will add in next month’s billing with the late fee penalty.
Cash advances or withdrawal – Interest rate applies if we take cash advance or withdraw money from a credit card. An example you can check on 12/02/2018 debit interest that is 1,224 INR. It is the interest charge on cash withdrawal.
Note – Interest charges apply in every activity whatever it is a late payment, cross due date, take cash advance or withdraw money by atm as well as 18% GST charge applies on every transaction whatever Emi interest or debt interest.
Check first raw 19/01/2018 GST apply on EMI interest.
If we calculate credit EMI principle = 6695 INR. Extra charges = 2705 INR.
Total Payment = 9400 INR
Next month they have to pay additional interest then GST fee pay. If they don’t pay EMI principle + extra charges then it will add in next month’s billing. Then interest charges will double. As a result, they have to pay previous interest above new interest or late payment fees. If he doesn’t pay interest he will be stuck in a debt trap. The losses are increasing cause high interest 40% are paying.
These charges we should keep in mind and interest charges mainly affect finances and never take EMI on credit cards. When you use a credit card, try to pay the full bill at one time.
In addition to this, more other charges that we should consider.
- Annual fee – Some credit provider offer 1-year credit card charges waived then 2-year charges $15 – $100
- Over limit charges – Suppose if your limit is $600 and you spend $700. Extra$100 that you spend from your credit card above this extra limit 2-4% extra charges apply.
- Check bounce or auto debt – During paying your credit bills if automatic paying bill mode stop due to low balance or cheque bounce then some charges apply.
- A foreign currency transaction 3 – 4 % fee charge according to transaction value.
- Fuel transaction charges May 1. 1.5% but some special credit card made for only paying fuel bills
- Lost, Damaged, stolen charges – in any case, if your card lost $2 – $10 new card providing fee.
We should never miss-use of financial equipment. We should use a credit limit according to overpaying capacity. Always remember the credit statement date or pay the full debt before the due date.
Never take credit card lightly but it can eat all your savings. So before using a credit card, we should consider how much money now I am taking and can I pay before the due date? If you follow this advice sure you will avoid extra charges and use credit cards very smartly.