Credit cards are an issue that people are most polarised on, second only to, maybe, political inclinations. People who tend to favor the cards are mostly millennials who need more breathing space to complete payment. Those against the idea are people who believe that these cards are programmed to destroy thriftiness. The ice could be broken with these people once the annual fee for cards is taken off the table.
Types of Fees in Credit Cards
Let us not mince words: the annual fee is not the only fee that you are liable to pay on a credit card. A credit card without an annual fee sure sounds inviting, but you need to take care of other things too. Finance charges, overseas transaction fees, and charges on balance transfers are a few operations that credit cards charge for. One can easily avoid them by opting for the best cards in India.
Avoiding Annual Fees
Often, banks charge an annual fee for the maintenance of your card. Cards like Yes Bank Prosperity cards waive off the fee on spending above INR 10,000 within three months of issuance. This fee is much like a membership fee, but it does not include the interest on due amounts. Options like Kotak Fortune Gold, Axis MY Zone, or IndusInd Platinum provide cards free of cost. Some cards like YES Premia offer perks like grocery points every time you shop for essentials with your credit card. These points can later be redeemed for discounts, so a fee might seem legit if savings manage to break even.
Some credit cards offer airport lounge access, which might lure you to buy the card, even at a cost. However, the main question you should consider is whether you fly that frequently to recover your money’s worth. Ditto for any kind of perks that might seem irresistible at the outset.
To sum up, there are plenty of options if you do not want to pay an annual fee. More often than not, people willingly pay the fees in exchange for privileges that would cost more otherwise. You should rather focus on how to avoid other charges that we will discuss in a bit.
Other Fees to Worry About
There are more pressing concerns than an annual fee for credit cards. There are financial charges that you pay when you pay less than the due amount. Then there is a balance transfer fee if you want to transfer the balance of one card to another (for perks or other convenience). Some banks charge for card replacement. You also need to pay a cash advance fee if you draw more cash using your card than the permissible limit. And of course, there are surcharges against international transactions.
All of the above, except for the cash advance fee, can be avoided by choosing the right card. If it suits you so, combine two or three cards to get the best out of the credit cards service. Avoiding a cash advance fee is the best option because it is an expensive option. Alternatives like personal loans could be cheaper, although there will be time involved in getting them approved.
There are other obvious rules that you need to follow if you do not want to pay unwarranted charges. For instance, pay your dues online to avoid a penalty against late payment. Make sure you always have sufficient funds for a transaction because most credit cards charge fines for a failed transaction. Avoid paying over-limit fines by making a transaction above the permissible amount. Although, the imposition of this fine is rare because banks alert their customers before they attempt such a transaction.
That is all you need to worry about. You would have noticed that with a bit of prudence, most of these fines and charges can be avoided. Lastly, you should use credit cards only for important transactions so that your account is clutter-free.