A Credit Card is an useful asset helping you maintain or upgrade your lifestyle. The benefits of using a card often outweigh the potential negatives like incurring multiple charges while using the cards. However, it is essential to be familiar with the different kinds of fees levied by companies before applying for a credit card.
A deeper understanding of the costs can serve in taking practical steps to minimize the fee burden while maximizing the rewards, so keep reading.
Types Of Credit Card Charges
Some of the fees collected by credit card providers are listed below.
- Rate of Interest (APR)
The interest rate on your outstanding debt is a significant cost imposed by plastic card companies. In other words, if you do not clear your full card debt each billing cycle, you will be charged a hefty interest o the due amount. The annual percentage rate, or APR, is indicated on the cardholder agreement. Most card issuers have variable APRs that change with the bank lending rate. You may quickly verify your charges using your online account or the most recent credit card statement.
- Late Payment Fees
If you do not pay your bill by the due date, the card issuer will charge you a late payment fee. However, companies allow you to avoid the penalty by paying a minimum amount. If you cannot pay even the minimum amount, the bank will levy a late payment fee.
- Annual Maintenance Fees
Card issuers charge maintenance fees for possessing the card. The costs are assessed on a yearly basis and are determined by a variety of factors. Moreover, the prices differ from one issuer to the next. Interestingly, you will be billed an annual fee even if you do not use the card. As a result, check with several card companies to get a credit card with no annual fee.
- Cash Advance Charges
In times of necessity, a credit card can be used to withdraw cash from ATMs for a fee called cash advance charges. A percentage of your credit limit is available for withdrawal as cash. The interest rate is determined per day and is levied on the amount borrowed from the transaction date. It is important to note that the interest-free grace period does not apply to ATM cash withdrawals.
- Over Limit Fees
Depending on the card you have, some issuers allow users to spend over the prescribed credit limit. However, such transactions are subject to over-limit charges.
- Reward Redemption Handling Fees
Card companies charge reward redemption fees when using your reward points for a transaction. Therefore, it is best to check the redemption fees with the credit card issuer before applying for one.
- Foreign Currency Markup Charges
Companies charge a foreign currency markup fee for your offshore transaction. The costs vary by card and are usually a percentage of the transaction amount.
A credit card is a terrific way to get money when you need it. However, it is equally necessary to become acquainted with the costs levied by credit card companies. This will enable you to take meaningful actions to reduce your debt burden while still enjoying the card’s benefits.
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