You may be disappointed with the credit card charges later. So be aware of these fees before taking a credit card. Seeing that it is free, many people take advantage of credit cards. You may be disappointed with the card charges later. So be aware of these fees before taking a credit card.
Many individuals apply for credit cards after being attracted by advertisements that highlight “no joining fee,” “free rewards,” or “lifetime free card” offers. However, what many do not realize is that credit cards often come with several hidden fees that can catch users off guard later. These charges can quietly increase monthly expenses and even lead to financial stress if not understood in advance.
Understanding these charges is the first step toward responsible credit card usage. By learning what banks often don’t openly discuss, consumers can make informed decisions and prevent unpleasant surprises on their credit card statements.
Reasons for These Charges
Card issuers and banks include multiple fees in their credit card agreements to cover operational and administrative costs. These charges are part of how credit card companies earn revenue, apart from the interest charged on outstanding balances. Unfortunately, these details are often buried in fine print or technical language that most users skip.
Knowing why these charges exist can help cardholders avoid them. Most of these fees can be prevented through timely payments, controlled usage, and careful monitoring of credit card terms.
Card Over-limit Fees
In case you exceed the prescribed credit card limit, banks or card companies charge over-limit fees for such transactions. You may not know this.
Each credit card has a spending cap, also known as a credit limit, assigned based on the user’s income and repayment history. When this limit is crossed, banks often still allow the transaction but impose a penalty — usually around 2% to 3% of the exceeded amount. For instance, if a cardholder’s limit is ₹1,00,000 and their spending reaches ₹1,05,000, the bank may add an extra ₹1,500 as an over-limit charge. To avoid this, users should regularly check their available credit and enable alerts through their bank’s mobile app.
Surcharges Sit at Petrol Pumps
Many card users are unaware that a surcharge is levied while buying petrol or diesel using credit cards. Many people do this without knowing it.
Whenever a cardholder pays for fuel using a credit card, a small surcharge — typically between 1% and 2.5% — is added. While some banks offer fuel surcharge waivers, these are often limited to certain fuel stations or specific spending thresholds. Frequent drivers who use their credit cards for refueling may notice that these small amounts add up significantly over time. Reviewing the card’s fuel benefit terms before using it at petrol pumps can help save unnecessary costs.
Entry and Annual Fees
Most credit cards charge a connection fee and an annual charge. Connection or fee has to be paid once. Where annual charges are charged every year.
The joining fee is usually a one-time payment when activating a new credit card. The annual fee, on the other hand, is charged every year to keep the card active. Even when a bank advertises a card as “free,” there are often hidden conditions — such as needing to spend a specific amount each year to keep the card free. For example, a card may remain fee-free only if the user spends ₹1,00,000 annually. If not, an annual charge ranging from ₹500 to ₹1,000 may apply.
Card Stolen Fee
In many cases companies charge a fee to issue a new card if the card is lost or stolen Otherwise the bank will not be able to issue you the card.
This charge, also known as a card replacement fee, is typically between ₹100 and ₹300. Some premium cardholders may enjoy fee waivers, but for most users, the replacement cost is standard. If a card is lost or stolen, it’s crucial to immediately report it to the bank to block unauthorized transactions. Once reported, the replacement process is quick, but the small fee for reissuing a new card will still appear in the next billing statement.
Non-payment Charges
If you don’t pay your credit card bill in full, the bank charges a finance charge on the remaining balance. That is why the entire bill should be deposited to avoid these charges.
Late payments or partial payments can lead to significant interest charges. The finance charge on unpaid amounts generally ranges between 3% and 4% per month. This means that a small unpaid balance can quickly grow into a much larger debt if ignored. Paying only the “minimum due” gives temporary relief but does not stop interest accumulation. To avoid these charges, cardholders should always aim to pay the full outstanding balance before the due date.
Cash in Advance Fee
This fee is charged by the credit card company or bank when you withdraw cash from an ATM using your credit card.
Using a credit card for cash withdrawal is convenient but costly. The bank charges a cash advance fee — typically 2.5% to 3% of the withdrawn amount — and interest starts accumulating immediately from the date of withdrawal. Moreover, such transactions do not earn any reward points. This feature should ideally be used only during emergencies and repaid quickly to minimize financial loss.
Foreign Transaction Fees
Card companies charge a forex markup fee when you use your credit card for transactions abroad. You should take credit card only after knowing these.
Whenever a credit card is used outside the country or for an online purchase in a foreign currency, a foreign exchange markup fee is added. This fee usually ranges between 2% and 3.5% of the total transaction amount. For frequent travelers or international shoppers, this can lead to high expenses. Some banks offer specialized travel or international cards with reduced or zero forex markup. Choosing such a card can make overseas spending far more economical.
Why Awareness Matters
Credit cards can be powerful financial tools if used wisely. However, many users fall into the trap of hidden charges simply because they were unaware of them at the time of application. Being informed about all associated costs allows users to manage their finances responsibly and make the most out of credit card benefits.
Regularly checking statements, setting payment reminders, and reading the card terms carefully can go a long way in preventing unnecessary expenses. Awareness ensures that a credit card remains a convenience — not a burden.
FAQs
1. Can over-limit charges be avoided?
Yes, by monitoring spending and enabling usage alerts, one can ensure the credit limit is never exceeded.
2. Are all credit cards free of annual fees?
No, most cards have annual charges unless the user meets specific spending conditions mentioned by the bank.
3. Is it safe to withdraw cash using a credit card?
It is allowed but not advisable because cash advances attract high fees and immediate interest.
4. How can users save on foreign transaction charges?
Frequent travelers should opt for cards that offer zero or low forex markup to reduce extra costs.
Conclusion
Before applying for any credit card, it’s essential to read the fine print carefully and understand all applicable fees. Being aware of these hidden costs helps individuals make smarter financial choices and maintain a healthy credit record.