Credit Card Fees in India, Explained Properly

Credit cards are free to use if you pay in full every month and know which five or six charges to watch. This guide is the list we wish someone had given us with our first card.

Joining and annual fees

The joining fee is charged once when the card is issued; the annual fee recurs on each card anniversary. Both attract 18% GST, so a "₹999" fee is ₹1,179 on your statement. Most mid-range cards waive the annual fee if you spend a stated amount in the previous year (₹1 lakh for Millennia, ₹2 lakh for SBI Cashback). Put a reminder in your calendar a month before the anniversary and check where you stand; if you are short, a planned purchase can tip you over.

Welcome benefits (vouchers, bonus points) are usually conditional on paying the joining fee and spending a minimum within 30 to 90 days. Read the condition before counting the voucher as "free".

Interest, and why the minimum due is a trap

If you pay the full statement balance by the due date you pay no interest at all; the 20 to 50 days between purchase and due date are free. Pay anything less and interest is charged on the entire balance from the transaction date, not just the unpaid part, at 3% to 3.75% a month, which is 36% to 45% a year. The "minimum amount due" (usually 5% of the balance) exists to keep the account current, not to be a sensible repayment plan. Paying only the minimum on a ₹50,000 balance costs roughly ₹18,000 in interest over a year.

Forex markup

Charged on every transaction in a foreign currency, including online subscriptions billed in dollars. The standard is 3.5% plus GST on the markup, about 4.1% all-in. Travel-oriented cards charge 1% to 2%; a few charge nothing. When a foreign website or terminal offers to charge you in rupees, say no: that is dynamic currency conversion, and the rate is worse than the card network's.

Late payment fees

Charged when even the minimum due is not paid by the due date, on a slab from about ₹100 for small balances to ₹1,300 for balances above ₹50,000, plus GST, plus interest. A late payment is also reported to the credit bureaus after 30 days and stays on your report for years. Set up autopay for at least the minimum due as a safety net, and pay the rest manually.

Cash advance

Withdrawing cash on a credit card costs 2.5% of the amount (minimum ₹500) immediately, plus interest from the day of withdrawal with no interest-free period. It is the most expensive money a bank will lend you. If you need cash, a personal loan or even an overdraft is cheaper.

Over-limit and other charges

Spending beyond your limit, where the bank allows it, costs 2.5% of the excess. Cheque bounce and payment return fees run ₹500 or so. Replacement cards, duplicate statements and reward redemption fees (₹99 on many cards) are small but add up. Rent payments through third-party apps attract a 1% fee on most cards, as do wallet loads and fuel on some.

The one-page rule

Pay in full, on time, in rupees, and never withdraw cash. Do that and the only fee you will ever see is the annual fee, and probably not even that.