It is important for you to understand the various charges involved in the usage of credit cards. As long as you use your credit card wisely and settle payments on time, you can minimise unnecessary charges imposed on you.
The following are the common charges that you may incur:
* Joining fee
Credit card issuers sometimes impose a one time joining fee for credit cards. The fee may vary depending on the credit card issuer.
* Annual fee
This is a flat fee which is payable annually once you accept the credit card. You will have to pay the fee even though you do not use the credit card. Annual fees may range from RM60 to RM90 for a classic card and RM130 to RM195 for a gold card.
* Finance charges (Interest charges)
These are charges imposed on you by the credit card issuer on the outstanding balance which you have not settled with them after the payment due date. It is usually calculated on a daily rest basis. You are advised to ask your credit card issuer to explain the method used in calculating the finance charges, as this amount can be large if you do not make payments on time.
* Cash advance fee
This is a fee charged for each cash advance transaction. This fee, which normally ranges from 3% to 5% of the total cash advanced, is in addition to the finance charges imposed on the amount of the advance given to you. The finance charge is calculated from the transaction date or when the amount is posted to your credit card account. There may be a limit on the amount of cash advance allowed for each customer.
* Late payment charge
This is a charge imposed when you fail to pay at least the minimum monthly payment by the due date. If payment is made after the interest free period, you will be charged both the finance charges (the interest on your outstanding balance) and late payment charges for the minimum monthly repayment amount due.
You need to
pay your bills on time in order to avoid running up substantial bills and being in debt
Reprinted with permission from BankingInfo (A Consumer Education Programme)
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