9 Types Of Credit Card Charges You Must Know About
credit card provide benefit , but if you don’t use it the right way, you may be losing out without register it. Here are 9 fees and charges that you must know to keep away from being charged optimally when using a credit card.
1. Cash advance fees
Some credit cards offer cash advance to the cardholder. This device permit you to withdraw cash from ATMs or over the counter using your credit card. The cash is then subtract from your credit limit or funds on security, and are subject to a certain limit.
thought, cardholders should think of cash advance as a very costly loan. This is because there are many charges incurred when you use a cash advance. First, the interest charge will start from the day of cash advance removal till you have paid it back in full. Most of the time, the interest charge rate is 18%, the minimum chargeable interest rate.
2. International ATM withdrawal
Withdrawing money from an ATM abode will suffer withdrawal fee and a foreign exchange fee per deal. These charges and their exact amounts should be recede in your bank’s terms and state. You have to make sure that your card supports the Cirrus or PLUS network as this will authorize you to take out money from your account no matter which country you are at. The charge for international ATM withdrawal range between RM8 – RM12. For example, Hong Leong Bank charges RM12.72 for international ATM withdrawal via both Cirrus and Plus network.
3. Dynamic Currency Conversion (DCC)
One of the many reasons people use credit cards is the convenience that it provides, especially when travelling overseas. Instead of having to change a large amount of currency and carrying cash as you travel, paying for your purchases with a credit card is easier and can literally help you save money
But to make sure you save money instead of being charged more, you must understand how Dynamic Currency change (DCC) works. DCC gives you the option to select the currency when paying for your purchase when you are abroad, either the country’s local currency or your home currency.
4. Foreign transaction fees
A foreign transaction fee is charged by credit card issuers on each transaction made abroad. Credit card holders are typically charged foreign transaction fees when they purchase items while overseas or when they make purchases that use an overseas bank to process the transaction. Foreign transaction fees will vary between credit card issuing banks, but the charge is usually about 1 to 3% of the total of each foreign transaction done.
5. Interest rates
One of the most important charge when it comes to using credit card is the interest rate. All credit cards charge interest rate. However, there is a common misconception about credit cards that interest is charged whenever you pay with your card.
In reality, you will only be charged for keeping an outstanding balance on your account after the interest free grace period. From the time the statement is issued to the payment due date, any new purchases will not be charged with an interest rate. This is known as a grace period.
6. Late payment charge
This is a charge for credit cardholders who make late payments on their credit card balance. For example, if the minimum payment is not made by the payment due date, a late payment charge will be imposed at 1% of the unpaid outstanding balance, subject to a minimum of RM10, whichever is higher up to a maximum of RM100.
7. Annual fees
An annual fee is also known as a maintenance fee that is charged annually by your credit card provider. Some banks will waive off annual fees depending on cards and promotions. Credit cards with annual fees are usually cards that offer extra benefits and perks such as. Annual fee can range between RM80 up to RM626 for premium credit cards.
8. Card replacement fee
If you lose, damage or your credit card was stolen, you will be charged for a replacement credit card. The charge differs between banks, for example Maybank and Citibank charges RM50, while Ambank charges RM25 for credit card replacement.
9. Goods & Services Tax (GST)
As of 1st April 2015, the government began the 6% GST charge in the country on goods and services, with the exception of a limited amount of basic necessities. With that, the annual fees of credit cards are also subjected to GST. Previously, credit card holders were charged service tax, however, after the implementation of GST, the RM50 service tax was removed. GST will only be charged on annual fee of a credit card, but not on late payment charges and other finance charges.
Make sure you are aware of all the charges that can incur when using a credit card as mentioned above. This way, you can ensure you can avoid the charges such as late payment charges, expensive interest rate, and dynamic currency conversion by being a smart and responsible credit card user.
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