If you are a credit card owner, you must be aware with the hidden costs on your card. If you don’t pay enough attention on these costs, there is a possibility that your monthly statements might give you a big shock.
Many credit card owners despite of having the card for many years do not pay much attention towards hidden costs or charges. Actually, there is not only one reason, but there are various reasons on the basis of which your lender or bank ask you to pay the charges.
Thus, it’s important for you to know those reasons that usually allow you to pay for the hidden charges knowing or unknowingly. So, here is a list below on when and how your lender can create a hole in your pocket with these hidden charges:
For an Overdue Payment
If you do not pay your minimum due amount because of some reason, your lender will charge you with the late payment fee. Moreover, as far as late payment fee is concerned, it varies from bank to bank. However, if due to some reason, you don’t pay the minimum due amount for atleast two consecutive months, you are considered as a defaulter. After this, the course of action completely depends on the outstanding amount on your card as well as on your past record.
The bank will then give you a risk score, as a result of which the collection strategy also changes. Not only this, further transactions will also be blocked on your credit card.
For Revolving Your Balance
If you are unable to pay your due amount by the due date, the banks provide you the option of paying the minimum amount by the due date and carry forward the remaining to the next billing period. However, in such case, you will also need to pay the interest on the remaining amount that you carry forward. Furthermore, not only this, when your balance got transferred from one month to another, for your new purchases, you don’t get interest free period.
For Cheque Bounce
When you made a payment through cheque and your cheque bounces, the bank or lender will charge you with a fee for dishonoured cheques. In addition to this, if your payment is being made close to or after the due date, you might be in more trouble. Due to this, the bank will not only increase your risk profile, but also because of beyond the due date payment, the bank will put many charges on you. Thus, charges you need to suffer are- bounced cheque fee, late payment fee along with the monthly interest which you need to pay on the outstanding amount.
For Crossing Your Credit Limit
When it comes to credit limit, it is the maximum amount that you can spend on your credit card, provided to you according your income. One can spend more than his or her actual credit limit, but be ready to pay the charges as well. If you exceed your credit limit, nearly 5% charges you need to pay on your exceeded credit card amount.
For Transfering Your Balance from Other Cards
Whenever you transfer your balance from other cards, it would not be wrong to say that many banks come up with zero interest transfer schemes. It means that you don’t need to pay the interest on the balance, whenever you transfer your outstanding balance from bank to another bank. But, this is not the reality in many cases because most of the banks give you a time frame of three months, in which you don’t need to pay the interest or pay the low interest on the transferred amount. But, beyond this given time frame, you need to spend some extra bucks.
For Withdrawing Cash Using Credit Card
Moreover, you not only need to pay the regular interest of approx 2.95%, as a credit card owner you also need to pay the one-time fee of nearly around 2-2.5% on the amount withdrawn. However, if you withdraw the money from an atm that does not belong to the same bank whose card you are holding, the cash advance fee would be quite higher. Not only this, for cash withdrawals, there is no fixed credit free period.
For Not Paying the Annual Charges
If some how you forget to pay the annual charges or you no further willing to use your card, hence don’t pay the annual charges, this will surely be a big problem for you. You should need to contact the bank in such case and let them know that you don’t want the card any longer. Otherwise, you will pay the annual fee penalty, once your due date has crossed.