Credit Card Penalties: Although using a credit card is simple and handy, there are taxes and other unstated costs involved. Understanding late payment costs, GST, and over-limit charges will help you make wiser decisions and save unnecessary spending.
Credit Card Late Fees?

The bank will impose a late fee (usually between ₹300 and ₹1,000) if you fail to make the minimum payment that is required. Each bank has different fines, and if you regularly miss payments or owe more money overall, your late penalties may go up.
In Simpler words,  late payment penalties have two functions:
1. Reimbursement for the processing expenses incurred by the lender.
2. Although using a credit card is simple and handy, there are taxes and other unstated costs involved. Understanding late payment costs, GST, and over-limit charges will help you make wiser decisions and save unnecessary spending.
Rules for Late Fees on Credit Cards?

Instead of charging a percentage of your entire sum due, credit card firms in India must set a fixed, slab-type rate of charges. The statements will show the due date, and in order to avoid a penalty, you must make the minimum payment by that day.
Common Charges For Late Fees:

1. Typical late fines (like ₹500).
2. Increased expenses if you had previously incurred debt or skipped payments in a row.
3. Interest was assessed on a sum that you failed to pay back.

Also Read: No Lifetime UAE Golden Visa for Indians? Here’s What Officials Really Said

Credit Card Over-limit Charges:

In addition to the above, there will be an over-limit fee when you exceed your maximum credit limit, often between ₹500 and ₹750:
1. Turning down any transactions that are too big.
2. Because excessive use is dangerous, your credit score will suffer.
3. The excess is subject to interest.
While some banks have a policy of permitting over-limit transactions if consumers want to do so, others will not authorize the transaction at all. If you frequently reach the limit, think about asking for a raise or altering your purchasing habits.
GST on Credit Card Charges:

All credit card service fees, including interest on purchases, late fees, over-limit fees, annual fees, and processing fees, are subject to 18% GST. The bank fee is raised by this tax. For instance, a late fee of ₹500 becomes ₹590 when GST is included. To avoid being careless, budgeting involves knowing these tax expenses so you can see how they accumulate and possibly even add to them over time.

To sum up, knowing how GST, late fees, and over-limit charges operate provides you the tools to manage your money. If you are responsible with your credit card, pay your bills on time, and routinely check it, it will continue to be a valuable tool for you rather than a costly problem.

Also Read: Bharat Bandh Today: Here are 10 things to know 

Share

• 
• 
• 
• 
• 
•