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| 7 Hidden Charges on Credit Cards You Should Know in 2025 |
Credit cards offer convenience, rewards, and financial flexibility — but they also come with a host of hidden charges that many users overlook. If not managed carefully, these extra fees can quietly accumulate, increasing your monthly bills and lowering your creditworthiness.
In this article, we’ll uncover 7 hidden credit card charges that every cardholder should know, how they work, and how to avoid them.
Quick Overview: Why Knowing Hidden Charges Matters
Most credit card holders focus only on interest rates and annual fees. But hidden charges like late payment fees, over-limit fees, or foreign transaction charges can silently drain your wallet. Understanding them helps you make smarter financial decisions and avoid unnecessary debt.
Table: Summary of Common Hidden Credit Card Charges
| Hidden Charge | Typical Fee Range | When It Applies |
|---|---|---|
| Late Payment Fee | ₹300 – ₹1,200 | Missing payment due date |
| Over Limit Fee | ₹500 – ₹1,000 | Exceeding credit card limit |
| Cash Withdrawal Fee | 2.5% – 3% of the amount | Using a card at an ATM or for a cash advance |
| Foreign Transaction Markup | 2% – 4% | International purchases or travel spends |
| Card Replacement Fee | ₹100 – ₹500 | Lost or damaged card reissue |
| Reward Redemption Fee | ₹50 – ₹100 per redemption | Redeeming reward points (varies by bank) |
| GST on Charges & Interest | 18% GST | On interest, fees, and service charges |
1. Late Payment Fee
If you miss your credit card payment due date, banks will charge a late payment penalty based on your outstanding amount.
Example: If your outstanding is ₹10,000 and the late fee is ₹750, your next bill becomes ₹10,750 + interest + GST.
How to Avoid:
- Set auto-pay or reminders.
- Pay at least the minimum due before the due date.
2. Over Limit Fee
When your spending exceeds your approved credit limit, the bank may approve the transaction but charge an over-limit penalty.
Fee Example: ₹500 + 18% GST
How to Avoid:
- Monitor your usage via app or SMS alerts.
- Request a limit increase if needed.
3. Cash Withdrawal Fee (Cash Advance)
Using your credit card at an ATM incurs a cash advance fee, usually around 2.5%–3% of the withdrawn amount, plus daily interest from Day 1.
Key Point: There's no interest-free period on cash withdrawals.
How to Avoid:
- Avoid using credit cards for ATM or urgent cash needs.
- Use debit cards or UPI for cash requirements.
4. Foreign Transaction Markup
When you use your card abroad or on international websites (e.g., Amazon US, Netflix, AliExpress), a foreign currency markup of 2%–4% is applied.
Example: A $100 purchase (~₹8,300) could cost ₹8,632 after 4% markup + GST.
How to Avoid:
- Use forex cards or zero-forex markup cards like Niyo, IDFC WOW, or RBL World Safari.
5. Card Replacement or Reissue Fee
If you lose or damage your card, most banks charge a replacement fee between ₹100–₹500.
How to Avoid:
- Store your card safely.
- Report lost/stolen cards immediately to avoid fraud and charges.
6. Reward Redemption Fee
Some banks charge a small fee when you redeem reward points for gifts, air miles, or cashback.
Fee Range: ₹50–₹100 per redemption.
How to Avoid:
- Redeem in larger quantities to reduce multiple charges.
- Look for credit cards with zero redemption fees.
7. GST on Fees & Interest
All charges — including interest, penalties, and annual fees — attract 18% GST. This often goes unnoticed and inflates your bill.
Example: ₹500 late fee + ₹90 GST = ₹590 total.
How to Avoid:
- Minimize the need to incur fees in the first place.
- Always check your monthly statement in detail.
Pro Tips to Avoid Hidden Credit Card Charges
| Tip | Why It Helps |
|---|---|
| Set bill payment reminders | Avoid late fees and interest |
| Check your credit limit before spends | spending over-limit charges |
| Avoid cash withdrawals via card | Skip advance fee and high interest |
| Read reward redemption T&Cs | Save on hidden point usage fees |
| Choose low-forex markup cards | Save on international spending |
| Regularly review monthly statements | Catch unnoticed charges or fraud. Frequently Asked Questions (FAQs) |
Q1. Do all banks charge the same fees on credit cards?
A: No, charges vary by bank and card type. Always check the MITC (Most Important Terms & Conditions) document before using a new card.
Q2. Is GST charged on all credit card transactions?
A: GST is charged only on fees, penalties, and interest, not on regular purchases.
Q3. Can I get a credit card with zero hidden fees?
A: Some cards, like z, zero annual fee, or lifetime free card, have minimal charges, but it's hard to find one with zero hidden fees.
Q4. How can I check if I was charged extra fees?
A: Review your monthly statement, check for any line items such as “late fee,” “finance charges,” “over limit fee,” or “GST.”
Q5. Can I dispute hidden charges?
A: Yes, you can call your bank's customer service and raise a dispute if you believe the charge is unfair or incorrect.
Final Words
Being aware of hidden credit card charges is crucial to maintaining financial health. These charges may seem small, but they can accumulate over time and eat into your credit limit. Always read the terms, monitor your usage, and use your credit card strategically to avoid these fees.
By being alert, you can enjoy the rewards and flexibility of your card without falling into a debt trap.
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