Credit Card Fees and Charges Made Simple: Know What You’re Paying For

Credit cards can offer convenience, reward potential, and financial flexibility if you use them smartly. However, many cards come with a long list of charges that cardholders may overlook. Whether you are exploring your first card or revisiting one you already use, it is important to understand credit card fees and charges in full. Understanding these costs helps you avoid unnecessary fees and use your card more efficiently. 

Understanding the Charges on Your Credit Card

A credit card, as a short-term borrowing tool offers flexibility in managing day-to-day expenses. Like most financial products, it comes with various fees. Some are one-time charges, others are annual or usage-based, and a few depend on how you manage your card. 


These may include fees for EMI conversion, card replacement, late payments, cash advances, overdrafts, or balance transfers. Understanding these charges helps you pick the right card and use it confidently for your regular expenditure. 

Types of Credit Card Fees

Credit card charges come in various forms and can affect what you ultimately pay above your purchases. Knowing about these charges can help in easy card management and prevent surprises later. 

Joining Fee

Some credit cards come with a one-time joining fee when issued. This is often presented in exchange for introductory perks or special joining benefits. However, many lifetime-free credit card options don’t charge this fee, such as the One Credit Card. 


Annual Fee

It is the annual fee you pay for holding the card. While basic cards often come with no annual charges, premium cards offering exclusive rewards and features typically include one. Before choosing a credit card, ensure the benefits outweigh the annual cost or not. 


Interest Charges (APR)

If you don’t pay your bill in full by the due date, interest is charged on the outstanding balance. This is known as the Annual Percentage Rate (APR) and typically ranges from 30% to 40% p.a. Paying your bill on time and in full helps you avoid this charge while paying only the minimum due can still make you liable for interest at the APR. 


Late Payment Penalty

Missing your payment deadline makes you liable for a late fee, and applicable interest, and can also lower your credit score. Some credit card lenders may also apply taxes on the penalty amount, which can make the total payable even higher. 


Overlimit Charges

Spending more than your approved credit card limit may lead to an overlimit fee. While certain issuers allow this in emergencies, it often comes with a charge and may impact your credit utilisation ratio. 


Foreign Currency Markup

If you use your card abroad or for international purchases, a foreign transaction fee is applicable. Usually, the forex markup fees go around 3.5% of the amount, and it can quietly build up over time. 


Cash Advance Charges

Withdrawing cash using your credit card is possible anytime, but it comes with a fee of 2.5% to 3%. Keep in mind that interest begins accruing immediately, unlike regular purchases, where interest applies only after the billing cycle if not paid in full. 


Replacement Card Fee

You might need to re-issue your credit card in case it is lost, stolen, damaged, or expired. Requesting a new card can typically incur a reissue fee of up to ₹250. While it is a small cost, it is worth considering, especially for frequent travellers. 

How to Minimise or Avoid These Charges

The good news is that most of these fees are avoidable if you manage your credit card smartly. Here are a few easy steps to help reduce or eliminate these charges: 

Always Pay Your Full Balance on Time: It helps avoid applicable interest and late payment penalties. 

Enable Reminders or Auto-Pay: Automating payments ensures you never miss a deadline and helps you avoid late payment charges. 

Choose the Right Card for Your Needs: Choosing the right credit card with lower applicable charges ensures your spending is worth it. A lifetime-free credit card is a great option to avoid recurring costs and maximise savings. 

Monitor Your Credit Usage: Try to stay well within your limit and avoid overspending to avoid overlimit charges. 

Check Your Monthly Statements: It catches errors or unrecognised charges early and gives you a clear view of any extra fees applied, so you can avoid them in the future. 

Avoid Cash Withdrawals Unless Necessary: You can use debit or UPI for quick cash instead of your credit card at an ATM. This will help you avoid cash withdrawals or cash advance fees. 

Be Mindful When Travelling: If you travel abroad often, consider a card with low or zero foreign transaction fees. 

Smart Habits for Long-Term Credit Card Use

Building smart credit card habits helps you take charge of your finances and avoid extra fees and liability.

Read all Terms and Conditions Carefully: They often hold important details about hidden or conditional fees. 

Know Your Billing Cycle: Understanding your billing cycle and due dates helps you make timely payments and avoid interest at the APR. 

Don’t Choose Cards Based Solely on Rewards: Many highly rewarding cards often carry higher fees. Review the benefits and risks closely to ensure your spending is worth the additional charges. 

Keep an Eye on Your Credit Report: Regularly checking your credit report helps you catch errors and spot signs of problems. It ensures that your credit information is accurate, protecting your score and financial health. 


Selecting a credit card that fits your daily financial habits is only the beginning. The primary objective is to understand the credit card fees and charges for overall credit management. A lifetime-free credit card, such as One Credit Card, offers a cost-effective way to enjoy credit benefits without annual fees. It also offers 5X reward points, allowing you to enjoy offers from top brands. 


This card helps you manage rents, virtual cards, EMI conversions, and OneTrips for planning international travel. With the powerful and robust OneCard App, you can manage everything from the app in just a few clicks! 


The app and card come with features like a budgeting tool, an insights feature, and reward points redeemable for value back. Overall, the One Credit Card makes managing finances easy through the OneCard App, without any hidden fees. Apply today!


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