Credit Card Charges – What You Need To Know
One of the primary drivers behind the boom of credit card usage is undoubtedly the convenience that these plastic cards give us. Rather than carrying a fat wallet filled with notes, a simple card could just as easily be used to pay for that gorgeous suit or taking out your date for an expensive dinner. While it gives us this privilege, it does come with a price that people tend to take for granted. Though the fees imposed by the merchants are “negligible” so to speak, an accumulation of these charges could build into bigger amounts in the future.
Being aware of the charges imposed is definitely one of the central steps in managing our finances. Take note of the variety of fees and do not be easily lured into interest free period term. It is always advisable to ask in detail the terms and conditions that come with a credit card so as to make sure we do not end up paying more than we intend to. Below is a general list of charges that a cardholder should be mindful of.
Credit card charges
Joining fee: This is a one-time fee that is similar to a registration fee. Depending on the banks you choose, the charges can differ. The most common rate would go at about RM50 to RM100.
Annual fee: Annual fees are the fees that banks charge on a yearly basis. Depending on the type of cards you apply for, be it a classic, gold, business gold, business platinum, platinum and so forth, the annual fees can differ. Some banks may also charge annual fees for supplementary cards.
Government service tax: An annual service tax of RM50 is charged for each principal card and RM25 for each supplementary card.
Late payment charges: For cardholders who are late on their payment, a portion of the total outstanding balance of the card, usually a sum of 1% or a minimum of RM5 or RM10 (whichever is higher) is charged as late payment charges. However, depending on the banks, the maximum a person has to pay for the late payment charges ranges from RM50 to RM100.
Cash advance fee: Credit cards could work in the same way as a debit card, in that you can withdraw money from it. However, bear in mind that the interest charged on this could be as high as 3% to 5% on the amount withdrawn, or in certain banks, a sum of RM25 to RM50 on every transaction (whichever one is higher).
Foreign exchange charge: Any payment transacted overseas normally attracts a foreign charge, usually at a rate of around 1%.
Statement retrieval fee: Some banks charge a fee for hardcopy statements, with the rate ranging from RM5 to RM20 annually. Additional statement requests may also attract additional charges.
Card replacement fee: A replacement card could cost you anywhere between RM25 and RM50.
Grace period: Some banks do provide an interest free period on purchases – known as the “grace period”, which is usually about 20 days from the statement date. The grace period is normally only available to cardholders who had fully paid off his or her previous month’s balance.