When setting out to opt for a credit card, you should keep in mind that there are number of fees charged by the issuing bank or institution. The interest charged on outstanding balance is the major fee amongst all.
But apart from interest, here are some other fees that are often charged to the customers:
Processing fee is the amount charged to customers when some liabilities such as gas bills, telephone bills, medical expenses etc. are paid using the credit card. Also, processing fees can be charged even in case of returned cheques.
Many credit card issuers provide customers with a facility to withdraw cash from ATMs or cash counters on their credit cards. Cash advances incur an interest which can be charged at a higher interest rate as compared to other bills paid using the card. Even the grace period during which the customer is not charged with interest is not present in this transaction. The calculation of interest starts the very moment when the transaction is completed which means that there is no grace period for cash advances.
If the customers swap their card and pay the bills in foreign currency, the issuing company charges fees for the transaction which can be as much as 3% of the total amount. The exchange rate factor and the variation in the values are also considered in this calculation.
Maintenance charges are nothing but membership fees which can be charged either yearly or on a month-to-month basis. Generally, the amount is pre-decided by the issuer or it can be a certain percentage of the credit limit.
Over Limit Fees
Over limit fees are charged to the customer in the event when the card holder surpasses the credit limit of the card either deliberately or unknowingly. According to the Credit CARD Protection Act of 2009, customers have to opt for over limit charges while applying for the card, or else, the issuing company cannot impose over limit charges on the card holder. If the customers choose to opt against it, then they are unable to purchase anything over the limit and no fees will be charged.