Though credit cards have emerged as a potent financial product to meet financial requirements, a significant number of individuals are reluctant to avail it. These cards are still considered as debt creating tools despite the substantial financial benefits they offer along with a line of credit.
However, with only come specific financial planning, card users can not only lower the burden of such expenses but also benefit from the card comprehensively. Consequently, they need to learn about unwanted credit card charges and find out effective tips to avoid them.
Tips to avoid unwanted credit card charges
The following offers valuable insight about the conventional credit card charges and tips to avoid them –
- Interest charges
Such a fee is a result of late payment or default made on the part of card users during one billing cycle. Typically, interest is calculated from the statement date and follows the parameters of APR like daily periodic rate or average daily balance.
Users should learn about credit card interest rate calculation in detail to know how unpaid debt actually grows in credit cards. The best way to avoid paying interest is to ensure that card users repay their debt either by the payment due date or during the interest-free period, i.e. grace period. Additionally, by paying the minimum due balance, cardholders can reduce their interest burden significantly.
2.Annual fee
Typically, this fee is levied on card users to avail the transactional benefits of a specific card on year-round. Often credit cards with attractive features and benefits come with a significant annual fee.
Nonetheless, some financers waive off this fee entirely when card users achieve certain transaction milestones in a given year. Meeting specified transactions with the card is one of the best tips to get the most of their credit cards that would help lower the burden of such unwanted charges.
3.Cash withdrawal fee
Though most credit cards extend the facility to withdraw cash through ATM, it comes with a substantial charge in the form of processing fees and interest. This directly makes availing such a facility expensive.
However, certain credit cards like Bajaj Finserv RBL Bank SuperCard allow individuals to withdraw cash through ATMs at a reasonable processing fee. Further, they extend an interest-free period to repay the sum of money withdrawn. Individuals should take advantage of such facilities and avoid paying charges altogether.
4.Loan fee
Quick disbursal is one of the potentreasons to opt for a personal loan on a credit card as it proves most useful during an emergency. However, such credit facilities also tend to come with a substantial processing charge and interest. Consequently, to avoid paying such credit card charges, individuals should try to repay the loan availed within the interest-free period as offered by select financial institutions like Bajaj Finserv.
5.Late payment fees
Typically, card users are levied with this charge on failing to pay the minimum balance by the due date. The best way to avoid this fee is by repaying credit card bills on time. Further, by enabling the auto-payment facility one can eliminate the risk of missing out on timely payments significantly.
6.Foreign exchange fees
Similarly, transactions made through credit cards in a foreign currency may attract significant charges. The best way to make such transactions is to first avail an international credit card such as travel credit cards which charge much lower fees on transactions.
In brief, individuals can avoid paying unwanted credit card charges by managing their credit card transactions and learning about the associated fees. Further, by opting for an affordable credit card from a leading NBFC, they can manage resulting charges easily.
