Top 9 Ways to Avoid Credit Card Fees

A Credit Card is every individual's go-to option for instant finances. You may be using the card for various purposes without realizing some services availed through a Credit Card may not be free. You need to pay an additional charge for it. As a Credit Card user, it is necessary to be aware of various Credit Card fees and how to avoid them.

1. Annual/Renewal/Joining Fees

This is a lump sum fee that you need to pay every year for using a Credit Card. The amount may vary for each cardholder and Credit Card variant.

How to Avoid: If you don't want to pay the annual fee, you can opt for a Credit Card that has zero annual fees.

2. Interest Charges

If you have a habit of paying the minimum balance of Credit Card billing, then the Credit Card issuer will charge interest on the outstanding billing amount. Also, the Credit Card interest rate will continue to accrue unless the total Credit Card billing amount is cleared.

How to Avoid: It is always advisable to pay your bill in full every month to avoid interest.

3. Late Payment Charges

Do you fail to pay the Credit Card bill on time? Delaying bill payments will result in late payment charges. And more importantly, Credit Card late payment charges will affect your credit score. At AU Small Finance Bank, the late payment charges range from INR 100 to INR 1100, depending on the total amount due.

How to Avoid: If you are not able to pay the Credit Card bill amount in full, it is necessary that you pay at least the minimum amount on or before the due date. This way, you can avoid a negative impact on your credit history.

4. Balance Transfer fees

A Credit Card balance transfer is when you transfer your Credit Card debt to another Credit Card offered by a new bank to avail the benefit of a low interest rate. Balance transfer will help you pay off your debt faster, but you incur a Credit Card balance transfer fee that will be 1% of the balance transfer amount.

How to Avoid: Find a Credit Card that doesn't charge a balance transfer fee. It is also necessary to understand the terms of the balance transfer offer before you opt for it.

5. Returned Payment fees

Many Credit Card users schedule the bill payment to avoid missing the payment due date. But if there is a lower balance in your bank account, then the payment may not be honoured by the bank, due to which Returned Payment fee will be charged.

How to Avoid: Check whether there are sufficient funds in your bank account.

6. Foreign transaction fees

When you use your Credit Card for purchases at any international location, you will incur an additional fee, i.e., Credit Card foreign transaction fee.

How to Avoid: Consider Credit Cards with low Cross currency mark-up charges. For instance, AU Small Finance Bank's AU Zenith Credit Card offers low mark-up fees of 1.99% on international transactions.

7. Over-the-limit fee

When you exceed the Credit Card limit, the card issuing company may apply Over-the-limit charges. It is mostly in cases where you have selected the option because if you have not chosen this Over-the-limit feature, the issuing company will simply decline your transaction done beyond the Credit Card Limit. AU Small Finance Bank charges a 2.5% over-the-limit fee, subject to a minimum of INR 500.

How to Avoid: It is advisable not to spend beyond the prescribed Credit Card Limit. Also, you may choose not to go for the Over-the-limit feature as it has little benefit to save yourself from paying the penalty.

8. Cash advance fees

When you are short on funds, you may consider using your Credit Card for cash withdrawal. Cash advances can be made at ATMs, bank branches and through online banking. The cash advance fee can be a minimum of 2.5% on the amount withdrawn.

How to Avoid: Credit Card cash advances attract high interest rates as they are risky, as per banks. If you have exhausted all the options only, then you should think of a cash advance; however, make sure you pay off the amount immediately. However, you should avoid doing this to save yourself from Credit Card Cash advance Fees.

While availing a Credit Card, most of us do not pay heed to the charges that come along with the card. Essentially, it is necessary to familiarize yourself with the types of charges so that you know how you can avoid them.

AU Small Finance Bank offers a range of Credit Cards to suit the needs of different customers. Apply now.

Sources:

https://www.cnbc.com/select/how-to-avoid-common-credit-card-fees/

https://www.au.bank.in/SOC_CC-MITC(with-Schedule-of-Charges).pdf

https://www.au.bank.in/SOC_CC-insurance-terms-and-conditions.pdf