Credit Card Charges: What You Really Need To Know
In the recent years one of the primary drivers for the surge in credit card usage is the convenience that these plastic cards give us. Rather than carrying around a big wallet filled with currency notes, a simple credit card could easily be used to pay for that gorgeous dress and taking out your date for a wonderful dinner. While credit cards provide us this privilege, it does come associated with a price that most people tend to take for granted. Although the fees imposed by the merchants see to be “negligible”, an accumulation of these charges could lead us into a big debt in the future.
One of the primary steps in managing our finances is definitively to be aware of the charges that are associated with credit cards. You must note the variety of fees associated with the credit card and do not be easily lured into free interest-period term. It is always advisable to inquire about the details of terms and conditions associated with a credit card in order to make sure we do not end up paying more than we intended to in the first place. Below is a list of general charges that a credit card user should be mindful of.
Credit Card Charges
Annual Fee: Annual fees are the fees that banks charge on a yearly basis. Your annual fee might differ, depending on the type of cards you apply for. Some banks may also charge annual fees for supplementary credit cards. Many banks waive the annual membership fee for the first year and waive the fee in subsequent years if the money spent using the card is more than a minimum dollar amount
Government Service Tax: 7% of annual service tax is charged on the annual fees for each principal credit card and supplementary card, usually the annual fee displayed is inclusive of this charge.
Late Payment Charges: Credit card holders who are late on their payment are usually charged a sum of SGD30-50 as late payment charges.
Cash Advance Fee: Credit cards could work in the same way as a debit card, meaning that you can withdraw money from it. However, you must keep in mind that the interest charged on this could be 5% on the amount withdrawn, or in certain banks, a sum of SGD15 every transaction (whichever one is higher).
Foreign Exchange Charge: All credit card payments transacted overseas normally attract a foreign charge, usually at a rate of around 1% to 3%.
Statement Retrieval Fee: Some banks charge a fee for a hardcopy of statements. Statement retrieval requests may also attract additional charges, usually ranging from SGD5 to SGD30.
Card replacement fee: Obtaining a replacement card could cost you anywhere between SGD 10 and SGD 20.
Grace Period: Some banks do provide an interest free period on purchases – referred to as the “grace period”, which typically is about 20 days from the statement date. This period is generally only available to cardholders who had fully paid off his or her previous month’s credit card balance.