Fees & charges! Well, it is one of the most important things that every credit cardholder should pay close attention to with their credit cards. Different types of credit cards charge a different kind of charges. Most of the fees & charges are not even told upfront to you. Knowing about these several fees & charges will definitely help you utilize your credit card prudently. The best thing is that many of them are avoidable as long as you know what they basically are & when they are charged.
Your credit card agreement is the right place to find a list of all the fees & charges that are associated with the credit card. You can find a copy of the agreement online or by calling your bank/credit card issuers asking to have the copy mailed to you.
Here in this article, we have mentioned 5 less-known credit card fees & charges that you should know before you agree to apply for a credit card.
- Cash Advance Fee
A cash advance fee is levied whenever you withdraw cash at an ATM through your credit card. However, dissimilar to withdrawing money from your own bank account, a cash advance basically involves borrowing the money from the credit card issuer. Depending on the credit card you own, you might be able to withdraw a maximum of 50% to 100% of your available credit limit. The cash advance limit completely varies from one card to another.
In the United Arab Emirates, the cash advance charge levied by the majority of the banks & credit card issuers is 3% of the cash amount withdrawn. In addition to this, few banks in the UAE may also levy a higher monthly rate of interest on cash withdrawal, which can be approximately 0.25% to 0.75% which is higher than the interest rate that is charged on the retail transactions.
- Over-limit Fee
The over-limit fee is charged when you exceed the limit of your credit card. Whether you exceed your credit card limit intentionally or accidentally, you may see a heavy new charge added in the next month’s credit card statement. Well, this would be an over-limit fee as a penalty for exceeding the limit of your credit card. The over-limit fee can vary from one card to another, depending on the credit card issuers.
Mind it, it does not just end here. Exceeding the limit of your credit card will also create a negative impact on your credit/CIBIL score. The best way to avoid paying the over-limit fee by keeping the balance of your credit card below the credit limit of your card.
- Balance Transfer Fees
Is credit card interest burning a hole in your pocket? Well, a balance transfer could be a convenient option in such circumstances. The majority of the banks or credit card providers allow its cardholder to transfer their current credit card’s outstanding balance to another bank’s credit card at lower or even 0% interest for a specific tenure. A balance transfer is indeed the best feature for those people who are looking to reduce their credit card debt quickly and easily. But if you are planning to do so make sure you aware of the charges. Well yes, you read it right. Most of the banks levied a fee for transferring a balance which could range from 1% to 3% of the card’s outstanding amount transferred. It varies from card to card, so make sure you pay attention to the fees that are involved in a balance transfer.
- Credit Shield Fee
Have you ever noticed a small fee named as “Credit Shield” in the statement of your credit card every month? Well, most the credit card owners don’t understand that what actually it means, in fact, many cardholders may not even notice ever for signing up for the card.
Well, credit shield is basically an insurance cover that helps the card owner to repay the card’s outstanding balance in the event of critical illness, natural death, involuntary loss of employment, and permanent disability. Please note that it does not insure the cardholder against credit card fraud.
It is, of course, a nice privilege to have but like other perks, it is not available free of cost. The credit shield charge across the majority of the banks in the United Arab Emirates varies from 0.5% to 0.99% of the outstanding balance. So, don’t forget to check credit shield fee while availing this privilege.
- Foreign Transaction Fee
A foreign transaction fee is charged by most of the banks and credit card issuers on purchases which are made in a foreign currency. Foreign transaction charges basically apply on credit card purchases made in foreign countries while travelling aboard. Please note that it can also be charged against purchases made online from your own country when the vendor is foreign & they process the transaction in its local currency.
Some of the best credit cards do not charge a foreign transaction fee but those credit cards charge this fee, they typically levy 3 percent of the transaction amount. So, if you are travelling abroad and want to avoid paying this fee, try to search a credit card that does not charge a foreign transaction fee. Also, you can opt for another method like cash for avoiding a foreign transaction fee.
The Final Verdict!
Through this article, you can see that the credit card you’re being provided is not at all offered free of cost & most of the fees you’re not even told directly. So, go through all the fees and charges before signing up for a one. Knowing about these several fees & charges associated with the credit cards will enable you to make the most of your card. In addition to this, smart usage of a credit card will also improve your credit score as well as your financial health.