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What are Credit Card Charges

The importance of credit card has increased manifold. It is not only easy, and light to carry and use, but it also offers benefits like reward points, cashback, and so on. Another advantage is that the credit card helps you build on your credit history. 

However, it is essential to know that the banks & NBFCs charge a fee to use a credit card. There is no ‘free credit card.’ The annual fee is not the only type of credit card charge, there are many other types of fees and costs. 

Types of Credit Card Charges

Here are the different types of credit card charges you might have to pay while using the credit card.

Type of Credit Card Charge


Annual Fee

Annual fee is the fee declared when issuing the card, it is not acknowledged as a ‘hidden’ charge. It is charged by the issuer only one time in the whole year. However, the amount of the credit card's annual fee varies and depends on the type of credit card you use. 


While some banks offer cards with no annual fee for a lifetime, others offer credit cards that charge an annual fee only after a particular period.  

This way, you will not be disappointed when you begin paying the yearly charge after the free period. Different banks levy different finance charges on credit cards. The charge depends on the features, benefits and the limit of the credit card, etc.

Cash/ATM Withdrawal Fee

There is a credit limit on your card, which is also called the cash limit. This is the maximum amount of money you can use with the credit card or withdraw from an ATM. 

Cash withdrawal or cash advance fee is relatively high, at a whopping 2.5%. The same is levied on the total amount you have withdrawn from the ATM.


You must note that credit card cash withdrawal charges begin the day you make this transaction. There is no interest-free period that applies for credit card cash withdrawals. 

Crossing the Credit Card Limit Fee

Your credit card has a specific cap on the amount you can spend, you may be allowed to spend more than the assigned limit but at a particular charge. 

Some banks charge ₹500 or more. The exact charge depends on the amount by which you have exceeded the assigned credit limit.

Late Penalty 

Credit card late payment charge is a charge that you incur in case you have delayed your payment. It is a fixed amount that is charged as per your statement balance. If you have not been able to clear the entire outstanding amount due on your credit cards, you also have the option to pay the minimum amount.


For example, HDFC bank charges a nil late payment fee if the statement balance is less than ₹100. ₹100 if the balance is between ₹100 to ₹500. ₹400 if the balance is between ₹501 to ₹5,000, and ₹500 if the balance is between ₹5,001 to ₹10,000.

Annual Percentage Rate or Interest Rate

An Annual Percentage Rate or APR is also levied on your credit card. This amount impacts your bills in case of an overdue payment. The charges are applicable only when you fail to pay the outstanding amount within the given period. 

For example, if your balance amount is ₹10,000, you might have to pay an interest of 30-40% annually.


Credit card transactions are also taxed as per the tax laws in the country. GST, which is set at  18%, is charged on the annual fee, interest payments, processing fees on EMIs, and so on.

Foreign or International Usage Fee

Credit cards are accepted internationally, but using the same globally attracts extra fees. The fee depends on the type of card you are using. It is a certain percentage of the transaction amount. 

For example, most credit card issuers in India charge a transaction fee of 3% to 5% in the case of foreign transactions.

Fuel Surcharge

Fuel surcharge is a fee that’s levied if you use your credit card to purchase fuel. It is usually charged as a percentage of the value of fuel you purchase. 

For instance, if the fuel surcharge is 2% and you use your card to purchase fuel worth ₹1,000, a charge of ₹20 will be levied. 

Charges for Reissuing Credit Card

If you lose your credit card and subsequently apply for reissuance, your credit card issuer will levy this charge. 

How Do Credit Card Charges Work?

When you use a credit card, you are borrowing money from the credit card issuer to make purchases or withdraw cash. Failing to pay off your balance in full each month, will lead to the issuer levying credit card charges in the form of interest on the amount borrowed.


The process of how credit card charges work begins when you, the cardholder, makes a purchase or spends using the card. When a transaction like this is made, the credit card issuer will charge your account for the amount of the purchase made. This charge will then show up on your next credit card statement.


You will then have a certain number of days to pay off the balance due in full, before interest charges begin to accrue. This period of time is known as the grace period, and is typically between 21 to 25 days. If you pay off the balance in full before the due date, you will not be charged any interest.


However, if you do not pay off your balance in full, the issuer will levy credit card charges in the form of interest on the outstanding balance. The interest charges are added to the amount due from your account, and this will be reflected in the next statement. The interest rate, also known as the annual percentage rate (APR), will vary depending on the credit card issuer and the cardholder’s creditworthiness.


It’s important to note that credit card companies may also charge additional fees, such as annual fees, late fees, or balance transfer fees. These fees will also be reflected in your credit card statement and added to the outstanding balance if they are not paid.


To avoid interest charges and additional fees, it’s essential to pay off your credit card balance in full each month. You must also stay aware of the terms and conditions of your credit card. Additionally, monitoring your credit card statement and keeping track of your spending can help you stay on top of your credit card charges and budget accordingly.

FAQs on Credit Card Charges

The best way to avoid credit card charges is to pay your entire credit card due amount on time every month.

The credit card providers charge a processing fee. This fee depends on the service provider, the card network it is linked with, the credit card processing method, etc. 

Using a credit card requires you to pay annual fees, GST, international transaction fees, ATM withdrawal fees, late fees, interest rates, etc.

Some banks offer zero annual fee credit cards for a lifetime or for a specific time. While most cards need you to pay a specific type of charge.

If you are worried about credit card hidden charges, you can rest assured that there is generally no cause for concern. All leading credit card issuers in India offer the details about the credit card charges they levy in a transparent manner. You just need to read the terms and conditions of your credit card thoroughly to be aware of all the charges. 

No, there are no fees levied each time you use your credit card. However, there are annual credit card charges that your card issuer may levy. These fees may be waived off if you spend above a specified limit in the previous year.

Yes, most credit cards come with nominal forex markup charges for international transactions. This can range from 1% to 3% or so of the transaction amount. 

No, credit cards do not come with a monthly fee. Rather, they come with annual credit card charges that are levied each year to renew the credit card benefits. These fees may be waived off on some cards depending on the amount spent in the previous year. 

The minimum credit card charges vary from one card to another. There are also credit cards that charge no joining fee or annual fee either. 

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