Credit Card

Do all credit cards come with an annual fee and joining fee?

No, not all cards attract an annual fee and/or a joining fee. In the case of basic beginner’s cards, there is usually no annual fee making them lifetime free. However, you should note that cards that have an annual fee often provide more benefits than the zero annual fee cards.

Do credit cards charge interest rate for non-payment?

The interest rate is applied on any balance you owe on your card. Credit card interest rates are the highest among various debt instruments available to the customer. In most cases, interest rates start at 18% and may go up to 45% annually based on various factors such as the type of card, card issuer policies and various other factors.

You can check the details of credit card interest rates charged by different lenders here.

What is foreign exchange markup fee on credit cards?

Whenever you spend in currency other than Indian Rupee, almost every bank charges a foreign currency mark-up fee which ranges from 1.75% to 3.5% and varies from card to card. To know more about foreign exchange mark-up fees on credit cards, click here.

What is the interest on credit card cash withdrawal? Is it different from the cash withdrawal fee?

Credit Card cash withdrawal is considered to be one of the costliest forms of credit available in the market and is advised to be used only as the last resort. The interest charged on cash withdrawal ranges from 2.5% to 3.5% per month and 23% to 42% annually. Moreover, unlike regular transactions, for cash withdrawals, there’s no interest-free period; charges start accruing from the day of the transaction till it’s paid in full.

Yes, cash withdrawal interest is different from a cash withdrawal fee as this fee is charged every time a cardholder withdraws cash using the credit card and it ranges from 2.5% to 3% of the transaction amount.

What is the difference between rewards and cashback?

Rewards can be earned in the form of points that can later be redeemed against gift vouchers or statement credit whereas cashback comes directly into your card account. Most of the cards offer rewards and only a few provide cashback facilities.

How to earn and use credit card reward points?

Every time you use your card, you earn some reward points. Accumulated reward points can be redeemed against gift vouchers, merchandise or a direct statement credit. The rate of rewards differs from one card to another and is also based on spending. For example, some cards may offer extra rewards on grocery spend while another card may give you more rewards when you book flight tickets or hotels.

Some cards offer cashback instead of reward points. These are credited directly into your card account, unlike reward points that have to be redeemed. Some of the best cashback cards in India are Axis Bank Ace, HDFC MoneyBack, Citibank Cashback and HSBC Cashback.

Read More: Everything you need to know about Credit Card Reward Points

Can I convert my reward points to cash?

Yes, this facility is available on select cards. You can convert the accumulated points into statement credit in a pre-decided ratio. For instance, SBI Elite cardholders can convert their reward points into cash to pay their credit card dues. For this card 4 reward points equal to Rs. 1.

How will I know about the expiry of my accumulated reward points?

To know about the expiry of your accumulated reward points you can use net banking or mobile banking facility offered by your credit card provider. You can also call customer care to know about your reward points’ expiry. Details about the expiry of your reward points are also included in your monthly credit card statement.

What does credit limit mean?

The credit limit is the total amount sanctioned by the bank on your credit card. This is the maximum amount you can use on your card. The bank decides the credit limit on the basis of your credit score, income and maximum limit on your existing credit cards. You can request a limit enhancement after a few years of usage but the approval of it will be at the bank’s discretion.

How to increase credit card limit?

If you are wondering how to get card limit increased, follow any of the options and try to get your limit increased:

• Make a request online (Many issuers allow their cardholders to ask for a credit limit increase online)
• Call your card issuer (Ask a customer service representative whether you’re eligible for a higher credit limit)
• Look for automatic increases (Some companies give cardholders an automatic credit limit increase when they’ve had the card for a while)

Can I use my credit card for a purchase value that goes beyond my available credit limit?

Yes, you can use a credit card to make purchases even if your credit limit is exhausted. This facility is offered by almost all providers and is termed as the “over-limit” facility. However, when you make purchases beyond your credit limit, an over-limit fee is levied on your transactions. Also, card issuers may have a set threshold for how much you can spend beyond your credit limit.

I received a call that I am approved for a credit card with a credit limit of Rs. 5 Lakh. Should I go for it?

Firstly, you should not get a credit card just because you are pre-approved for it. The choice should be based on whether the card matches your spending preferences or not. Second, the credit limit you will get on the card cannot be pre-decided (unless it is a secured card where the limit is decided as a portion of your deposit). It is based on a lot of factors including your income, the highest credit limit on your existing cards and the bank’s internal criteria. You will get to know your credit limit in the card document when the card reaches you. So, it is advised not to fall for such high credit limit offers.

Why do I have a negative balance on my card?

A negative balance on your credit card simply reflects that your credit card issuer owes you money. A negative balance could arise due to reasons such as paying more than the balance amount, refunds made into your credit card account, or cashback received into your card.

What is the minimum due in a credit card?

The minimum amount due on your card is the minimum amount you need to pay on or before the due date. It is a small portion of the outstanding every month. The minimum amount due is usually 5% of the total outstanding balance on your credit card but can be higher if:

• You bought something on EMI
• You spent more than your credit limit
• You have not cleared off your previous month’s dues

How can I pay my credit card bill?

There are various ways to pay your bills such as net banking, mobile banking, bill desk, NEFT, cheque, etc. Alternately, you can also walk into the nearest bank branch and make an upfront payment over the counter. However, cash payment attracts a certain fee.

What happens if I don’t pay my credit card bill on time? 

In case you miss or forget to pay your bill, you will have to pay late payment fee and additional interest charges. Late payment fee is usually a fixed charge based on the total outstanding amount on your card and will only be charged once in a billing cycle, whereas interest (also known as finance charges) are calculated as a percentage of the total due for as long as your dues remain unpaid. Also, when you have an overdue balance on your card, the interest-free period becomes invalid. This means you’re your new transactions will start incurring interest charges from the first day. Since credit card interest rates are the highest among all credit products, even a small overdue can lead to a debt spiral and cause damage to your credit score.

Can I pay my credit card bills before the due date?

Yes, you can pay your credit card bill before the due date. Paying your bills before the due date ensures that you do not incur any additional charges.

How are credit card late payment charges calculated?

When you fail to pay your minimum amount due, late payment charges are levied by the bank. These late payment charges differ from bank to bank and card to card. Late payment charges usually depend on the total outstanding amount on your credit card. For example, SBI cardholders do not have to pay any charge for the total amount due from Rs. 0 to 500. Whereas, a charge of Rs. 500 is to be paid for the total amount due greater than Rs. 500 and up to Rs. 1,000.

Note that in addition to late payment charges, the bank will charge interest on the total amount due until it is paid off in full. Until then, the interest-free period on your card also becomes invalid. This means interest will also be charged on the new transactions from the date the transaction is made till the time all your previous dues are cleared.