There are a host of advantages offered by credit cards. What’s even better is that there are ways to avoid the most common charges by following a few simple steps.
What are the Most Common Charges?
The common credit card charges include:
- Annual maintenance fee
- Late payment fee
- Interest charges
- Over-the-limit fees
- GST (goods and services tax)
- Foreign currency mark-up fees
- ATM withdrawal charges
While charges like GST cannot be avoided, you can still minimize or even eliminate some of the other fees.
Quick Tips to Avoid Common Credit Card Charges
- Get a card with no annual fee: An annual fee is charged just for holding the card and needs to be paid even if you do not use it to buy anything. So, the first step to avoiding charges is to compare credit cards and pick the one that has zero annual fees for life. Make sure that the issuer is not waiving the fee for a specific period, like the first year. While there are many types of credit cards, a lifetime free option will eliminate annual maintenance charges forever.
- Get a card with zero over-the-limit fees: Over-the-limit fees is levied when you use your card to make purchases beyond the assigned credit limit. However, you can avoid this by applying for a card with no over-the-limit charges.
- Pick a card with free ATM withdrawals: Even if you use your card extensively, you may require cash for certain transactions. You may prefer to withdraw small amounts more frequently from the ATM than large amounts in one go. But doing so can attract cash withdrawal fees or cash advance charges on your credit card. These charges are applied every time you withdraw cash from an ATM. So, choose a card that offers at least a certain number of free withdrawals per month and plan your cash-based transactions accordingly.
- Pick a card with the lowest interest rate: The most common form of credit card charges is the interest levied on your credit dues as per the APR (annual percentage rate). You can avoid this charge by paying off the debts in full within the due date of repayment. Even with the best of intentions, there may be times when you get delayed in repaying the dues. So, ensure to take a credit card with the lowest interest rates. Even if you fail to make repayments on time, you won’t incur high interest charges.
- Choose the EMI option for big-ticket purchases: When you purchase something expensive using your credit card, it is a good idea to convert the amount into EMIs, so that you can pay off your dues in smaller amounts over a longer repayment tenure and at a lower rate of interest.
Keep an eye on reward points and redeem them periodically. Choose the type of credit card that suits your needs and offers the maximum benefits. Also, be sure to read the terms and conditions carefully.
