Understanding Credit Card Charges: Common Fees and Expenses to Be Aware Of

The convenience that credit cards bring is unmatchable. Yet, it’s crucial to recognise that these benefits come hand in hand with various charges that may catch you off guard if you’re not careful. 

Every credit card holder has faced that moment of bewilderment on seeing certain unfamiliar charges in their monthly statement. These credit card charges, if not managed well, can lead to a surge in your expenses and even impact your CIBIL score. 

This guide will help you understand the different charges that credit cards entail, ultimately empowering you to make informed decisions about your card usage.

Overview of Common Credit Card Charges

Annual and Renewal Fees

Almost all credit cards come with an annual or renewal fee that you must pay to continue availing of the card services. The charges vary widely based on the credit card type, and premium cards usually have higher fees.

  • Many banks waive the first year’s annual fee or offer to reverse these fees upon achieving a certain spending threshold.

Cash Advance Fees

You need to pay cash advance fees if you use your credit card to withdraw cash from an ATM.

  • These charges can range between 2.5% to 3% of the withdrawn amount.
  • Remember, cash advances also start accruing interest immediately, which makes them costly if not repaid as soon as possible.

Also Read:- What Are Credit Card Cash Withdrawal Charges?

Foreign Transaction Fees

If you use your credit card abroad or for transactions in foreign currency, your bank will levy foreign transaction fees.

  • These charges usually range from 1% to 3.5% of the transaction amount.
  • Some premium cards offer lower foreign transaction fees as a part of their benefits.

Late Payment Fees

One of the commonest credit card charges you may face is the late payment fee if you fail to pay the minimum due amount by the due date.

  • These fees can vary from a flat rate to a percentage of the due amount, with a minimum and maximum cap.
  • For instance, if your credit card bill is Rs 10,000 and you miss the payment date, the bank may charge you some amount as late payment charges.

Over-limit Fees

The bank will charge an over-limit fee if you exceed your credit card limit.

  • This fee is usually 2.5% to 3% of the over-limit amount.
  • For example, if you exceed your limit by INR 1,000, you might pay around INR 25 to INR 30 as over-limit charges.

Balance Transfer Fees

When you execute a balance transfer from one credit card to another, it is commonly done to leverage lower interest rates.

  • This fee is typically a percentage of the transferred amount, ranging from 1% to 5%.
  • However, some banks offer promotional balance transfers with lower fees or even waive the charges.

Understanding Interest Rates

The bank charges interest when you carry a balance on your credit card past the grace period. Understanding how these interest rates work can help you manage your credit card expenses better.

Purchase Rate

The purchase rate is the interest you pay on your credit card balances from purchases if you don’t pay the full balance by the due date.

  • This rate varies across banks and credit cards, typically 14% to 42% per annum.
  • Remember, you can avoid paying this interest by paying off your full balance each month.

Cash Advance Rate

The interest rate on cash advances is usually higher than the purchase rate.

  • This rate can go up to 49% per annum.
  • Also, interest on cash advances starts from the withdrawal date, with no interest-free period.

Balance Transfer Rate

The balance transfer rate is the interest charged on the balance you move from one credit card to another.

  • Some banks offer a lower interest rate for a promotional period on balance transfers to attract customers.
  • However, after this promotional period, the standard purchase rate applies.

Unforeseen and Lesser-known Credit Card Charges

Apart from the common fees, you may encounter a few lesser-known expenses in your credit card journey.

Card Replacement Fees

If you lose your credit card or it gets damaged, the bank will charge a fee to issue a replacement card.

  • This fee varies across banks, usually around INR 100 to INR 150.
  • However, some banks may waive this fee for their customer service.

Payment Return Fees

If your credit card payment bounces due to insufficient funds in your account, the bank charges a payment return fee.

  • Such occurrences also negatively impact your CIBIL score.

Paper Statement Fees

While e-statements are usually free, some banks charge a fee for providing a physical paper statement.

  • This fee can range from INR 100 to INR 500 per statement.
  • Opting for e-statements saves this cost and is an eco-friendly option.


Understanding your credit card charges empowers you to use your card judiciously and avoid unnecessary expenses. With the knowledge you’ve gained from this guide, you can navigate your credit card journey more confidently. Note that the key to smart credit card usage lies in maximising the rewards and minimising the costs.

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