Credit Card fees, charges & hidden debits: All you need to know about Credit Cards

We all know a credit card is a financial product that permits customers to buy goods and services, usually within a pre-approved limit. Today in India, credit cards are widely accepted in offline and online trade channels and have become a necessary part of our life. However, though the user base of cards in India is reasonably high, one must guide a large section of people on how to use credit cards. 

Some fees may be levied by the issuer when you apply for a credit card. But before we look at the charges, let us quickly understand the features and benefits of credit cards. 

Credit Card Benefits

A card’s primary benefit is easy access to credit. In addition, you can use the card now and pay for your purchases later since cards operate on a deferred payment basis. 

Convenience in buying, interest–free credit, EMI payment facility, and insurance for stolen cards are the other financial facilities a card offers. In addition, you can avail yourself of cash backs and Deals on specific purchases and enjoy rewards on spending certain amounts. A card is also safer than carrying money for your purchases.

Features of Credit Cards

  Different features like a sign-up bonus, no annual fee, rewards etc., make a card unique, and for most issuers (banks / financial institutions), features are marketing tools. However, reviewing and matching offered features to individual suitability is crucial.

Fees, Charges and Hidden Debits

All issuers impose several charges on credit cards. Some of the levies are the annual fee, interest payments, and processing fees for EMIs, which are all currently subject to GST at a rate of 18%. There may be a lack of transparency for the user on some of the charges. The hidden Debits can be:

  • Cash Advance Charge

A cash withdrawal or cash advance can be pretty expensive because fees of up to 2.5% of the amount withdrawn are involved. In addition, many users are unaware that interest is imposed on cash advances from the day of the transaction, and there is no interest-free period.

  • Overage Charges

Most banks charge a minimum of Rs. 500, but it also depends on how much you have exceeded your credit limit. In addition, banks will also charge a late payment fee for delayed payments.

  • Rate of Interest (APR)

  It is a fact that credit card interest rates are the highest compared to other borrowing types. So when you make the minimum or part payment of the dues, your bills are impacted by the Annual Percentage Rate (APR) imposed on your credit card.

You can avoid higher card charges by following some of the simple financial disciplines mentioned below.

Credit Card disciplines

Undoubtedly the advantages of a credit card are innumerable. However, undisciplined usage can affect your personal finances. Some of the best practices are:

  • Timely payment

Maintain your spending within a limit according to your income. Ensure to make your credit card payment dues before the last day.

  • Avoiding cash Advances

Cash Debits against cards are costly due to very high credit card interest rates.

  • Better Credit Utilisation Ratio

A high ratio gives the impression of a risky borrower. Generally, an utilization ratio of around 30% of your sanctioned limit is considered good.

  • A good Credit Score

Paying card dues late or exhausting your credit limit regularly and applying for too many credit cards stress your credit score. In addition, unplanned use may impact your CIBIL score negatively and affect your future borrowing potential. Therefore, it is best to understand that the CIBIL score is a critical metric used by banks / financial institutions to evaluate your credit request, including a credit card application.


While obtaining a credit card is easy, choosing the best one for you requires careful study. A more straightforward option, however, is to find out from the experts. Ruloans is one of India’s top credit lending companies for all your financial needs. From credit cards to business loans, personal loans and mortgages, Ruloans help customers achieve their objectives. Check here for more details:

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