6 CREDIT CARD charges you can avoid

Most of the fees that a credit card company charges can be avoided. Here is a list of few.

1. Annual fees

There are many cards in the market, which come without any annual fees. Opt for them.

The ones with annual fees may tempt you with better offers or more loyalty points for every rupee spent, but when you actually sit and account for the money you spend on getting your paid card and freebies you get on the card, it evens out or the returns may be lesser.

So it does not make any sense to opt for a paid card, when there are so many free cards available.

The author is a credit expert with 10 years of experience in personal finance and consumer banking industry and another 7 years in credit bureau sector. Rajiv was instrumental in setting up India's first credit bureau, Credit Information Bureau (India) Limited (CIBIL). He has also worked with Citibank, Canara Bank, HDFC Bank, IDBI Bank and Experian in various capacities.

2. Late payment fees

It is always advisable to pay your entire amount due before the due date. Otherwise it will attract late payment fees, interest on the billed amount and proportionate service tax.

This part of the credit card fees is absolute waste of money, and easily avoidable.

Looking at the larger picture, if you delay your payments it will show as overdue in your credit score which is something the lenders hate to see in a credit score.

3. Cash advance fees

This is not a fee in traditional terms. It could either be an interest charge on a short term loan taken by you on your credit card or a processing fee.

It ranges between 3 to 5 per cent.

Make sure you use this only case of emergency and as a last option. The processing fees on cash advance fees are higher if you withdraw the amount abroad. Call your bank before you travel abroad to know how much it is.

4. Balance transfer fees

This is trap people often get into. Take Jagmohan Reddy, a Bangalore-based engineer's case.

"These balance transfer come at an interest rate or a processing fee of 3-5 per cent. It's very attractive as my life is very disorganised financially. I had four cards, so kept doing balance transfer. My bill swelled to four times the money I had actually used up. That is when I took stock of the situation and paid up the entire amount," said Reddy, after which he cancelled three cards and kept only one.

5. Foreign currency conversion fees

Every credit card network service provider charges a foreign currency conversion if you swipe your card abroad. It could range between 1-4 per cent of the transaction charges.

Call your bank before you leave the country so that you know how much you are being charged.

6. Foreign transaction charges

Every bank also charges its customers different amount on every transaction made abroad. It is always advisable to call your bank and check how much those charges are.

To avoid these charges, it is advisable to carry cash.