Learn About These Credit Card Charges To Make Smart Credit Choices

Credit cards have rapidly become a key ingredient of the growing paperless economy. These help you to increase your purchasing power. You can make quick and easy payments even if you do not have the required funds at your disposal. Many card issuers also reward their customers with attractive offers, discounts, cashback deals and exclusive benefits on select purchases. Credit cards also offer an opportunity for you to build your credit unlike debit cards. However, credit cards must be considered as a short-term loan. It includes regular interest payments among other charges.
Every credit card company attaches interest rates and charges based on their discretion. It is important to learn about the charges and compare the interest rates before opting for a credit card.
If you are looking to apply for a credit card, consider the following costs and charges attached to a credit card:

Annual fee payment, fees for joining and renewal

Every credit card is accompanied with an annual fee which needs to be paid once in the lifetime of a card. The fee associated with each card varies. It usually ranges between 0 and Rs.30,000. The amount is usually billed in the card statement of the particular month. A number of card issuers have now introduced ‘zero or lifetime free’ annual fees or offer a limited period for with no annual fees.
When your application for a credit card gets sanctioned, most card issuers charge a joining fee which ranges from 0 to Rs.1 lakh. A credit card renewal fee is a predetermined amount which needs to be cashed once every year.
Charges related to finances
Most credit card companies offer an interest-free period to the cardholders. However, if you are unable to make timely credit card bill payments, an interest rate within 23%-47% would be charged to your account. The interest-free period becomes reactivated only after payment of the pending dues.
Fees for cash withdrawal
Cash withdrawal fees or cash advances fees are billed to your account if you withdraw cash from an ATM using your credit card. This fee is usually 2%-3.5% of the withdrawn amount or Rs.500, the higher of the two. The total amount to be paid is tallied from the day of the withdrawal until repayment.
Penalty for late payment
You can be charged with an overdue penalty if you are unable to make timely payments as per the bill statement or at least pay the minimum balance. Credit card issuers decide the value of the penalty depending upon the balance on the card.
Over limit-related charges
If you surpass the predetermined credit limit, you could be billed with an over limit penalty. The penalty could fall anywhere between 2.5%-3% for a minimum withdrawal of Rs.500.
Surcharge payment
In case of credit transactions, surcharge is the tax associated with goods and services. 2.5% is charged for railway-related expenditure and 1% or Rs.10 is charged for fuel-related cost. If the transaction for fuel exceeds Rs.400 or Rs.500, it is free from surcharge.
Charges for transactions in foreign currency
A conversion fee is applied if a credit card is used overseas. Credit issuers can charge up to 3.5% for an international transaction.t
Additional charges
A credit card is loaded with other charges such that are associated with deposits, delayed payments, fraudulent transactions and card replacement.
Bottom line
It is important to remember that, even though credit cards can be a helpful financial tool, it needs to be utilized responsibly. Factors such as delayed payments, outstanding dues and penalties can detrimentally bring down your credit score. The only way to enjoy the rewarding offers and benefits offered by credit cards is to make timely payments and regulate your credit card utilization.

How do I Convert HDFC Credit Card Purchase into EMI?

Even before converting your HDFC credit card purchase into EMI, ensure that the credit card purchase or transaction which you wish to convert into EMI is eligible for HDFC’s SmartEMI facility. You can check the same through your HDFC NetBanking account or by calling HDFC customer care, in case you don’t have an online banking account.

To check the eligibility of your HDFC transaction through NetBanking and to convert the same into EMI, follow the instructions mentioned below.

• Login to HDFC Bank NetBanking account.
• Click on ‘Cards’ from the main menu
• From the left side menu, Click Transact > SmartEMI
• Select credit card
• Choose transaction type as ‘Debit’ and click on ‘View’
• All the transactions eligible for conversion into EMI will be displayed along with an option ‘Click here to know your eligibility’.
• Click on the option corresponding to the transaction you wish to convert into EMI.
• Details of the EMI facility will be displayed
• Select the tenure in months to know the EMI details
• Check the terms and conditions box and click on ‘Continue’
• The SmartEMI details including loan amount, interest rate, tenure and monthly EMI will be displayed.
• If you’re okay with the interest, tenure and EMI, you can click on ‘Confirm’

The EMI facility will be approved immediately and the respective reference number and loan number will be displayed. The EMI will be effective from your next billing cycle and will be included in the minimum amount due.

What Lenders Look for When You Apply for Credit Card

When you apply for a credit card, there are multiple factors lenders consider before approving your application. Potential lenders always check your CIBIL score before issuing you a credit card. There are other factors that affect your credit card application such as your income, the organisation you work for, age, the city you reside in, and your payment history.

Factors lenders consider before approving your credit card application

• Credit score: Credit score is a 3-digit number that indicates your creditworthiness based on your credit history. Lenders check your credit score to analyse the risk and your repayment capacity. Your credit score can range anywhere between 300 to 850. A high credit score indicates that you are a financially trustworthy person in the eyes of the lender. If you have a low credit score, your credit card application may be rejected straightaway. Credit Information Bureau (India) Limited (CIBIL), one of the leading credit reporting agencies in India keeps a track of all your credit-related activities and issues your credit score. A credit report is a comprehensive document issued by the credit bureaus in India which list out all your borrowing and repayment history. There are many ways you can improve your credit score even if it is low currently.
• Debt-to-Income Ratio: A Debt-to-Income (DTI) ratio is determined by taking the sum of all your debt and dividing it by your income. Generally, your debt-to-income ratio should be less than 30%. If you have a high Debt-to-Income Ratio, any changes in your income level will put you in a financial crisis. So, if you have a high DTI ratio, consider closing one of your existing loans, clearing your Equated Monthly Instalments (EMIs), or paying off your credit card balance in full. Save the money you spend towards clearing your debt. This will lower your DTI ratio.

• Income and employment: If you have applied for a credit card, you would know that you have to submit your recent payslips if you are employed or your income documents if you are self-employed. Lenders analyse your employment and income details before issuing your credit card. While viewing your credit card application, lenders also check if your employment is stable.

• Credit Card Utilisation Rate: Apart from your payment history, your credit card utilisation rate is also an important factor that affects your credit card application. If you have multiple credit cards or had a credit card in the past, your credit utilisation rate can tell a lot about you. If you have over utilised your credit limit, your credit card application may be rejected. However, if you maintained a good credit utilisation rate, you would get a better deal on your credit card application.

• Delinquent accounts: If you have a delinquent account in your credit report, it could affect your credit card application negatively. A delinquent account is a credit account on which the customer hasn’t made the minimum due amount within the due day. When the account is 30 days past due, the credit provider will contact the customer to make the payment to restore the account. If the account is 90 days past due it will affect your credit score significantly. Before applying for a credit card, check your credit report and make sure you do not have any delinquent accounts.

Credit card application tips

• Before applying for a credit card, make sure you check your credit score and read your credit report. You can get a free copy of your credit report from each of the credit reporting agencies in India namely, TransUnion, Experian, and Equifax. You could also get a free copy of your credit report from one of the neutral financial advisory websites like BankBazaar.
• Close your existing loans if possible and lower your Debt-to-Income Ratio.
• If you have multiple credit cards, make sure you clear your credit card balance and maintain a good credit utilisation rate.
• Pay all your bills on time. This will increase your creditworthiness.
• Do not apply for too many credit cards or loans at the same time. The number of loan applications you submit has a negative impact on your credit card application.

If you have a low credit score or a high Debt-to-Income Ratio, make financially healthy changes and wait for few months before you apply for a credit card. Once you have made some changes like closing a loan or clearing your credit card debt, wait for a month for it to appear on your credit report.

How do I pay my credit card bill with another credit card?

Banks that issue credit cards in India do not let a cardholder use one credit card to pay the bill of another. A cardholder cannot use a credit card directly to pay another's bill. However, there are other ways in which one can pay a credit card bill using another credit card. Listed below are two ways in which a cardholder can do that:

• Balance Transfer: Using the balance transfer feature, a credit cardholder can transfer the entire or a part of the debt that has accumulated on another credit card to a different credit card. This feature helps the cardholder to keep a track on their balance and payments. This is also a wise way to save on the interest that one needs to pay.
• Cash Withdrawal: The cardholder can withdraw cash using a credit card that has ample amount of unused credit limit and use the cash to pay off the debt on the credit card that has accumulated debt.

What is the billing cycle for the HDFC credit card?

Most banks in the country decide the billing date for the credit cards that they issue to their customers. Also, banks mention the billing cycle details in the monthly e-statement that they issue. The RBI has a set of rules and regulations in place that the banks need to follow. The bank asks the customer to pay their billing within this set billing cycle. Generally, the billing cycle of an HDFC credit card is a minimum of 20 days and a maximum of 50 days.

How To Make The Best Use Of Supplementary Or Add-on Credit Cards

It is a truth universally acknowledged that credit cards unlock a world of financial freedom for the cardholders. With constant evolution of the financial world, more and more options are opening up in terms of products and services. So now, one can easily share this financial freedom with their family members, thanks to the introduction of supplementary cards. Supplementary or add-on cards, as they are popularly known, give the primary cardholders an option to share the benefits of the credit card. Supplementary cards can be issued for the primary cardholder's family members including their spouse, children or parents. Almost all the major banks in India issue supplementary credit cards. However, there is a limited number of supplementary cards that is issued by the banks. Also, a supplementary cardholder should be at least 18 years or above to be able to use the card.

Listed Below Are Some Of The Important Properties Of A Supplementary Credit Card:

• 
  Gathering reward points: The reward point system of a credit card lets the cardholder earn bonus or points each time they swipe the card. After gathering these reward points, the cardholder can claim exciting products from the bank's catalogue. It works in the same manner with supplementary or add-on credit cards. The number of reward points that the supplementary cardholder earns for subsequent swipes is the same as on the primary card.
  
• Benefits for the supplementary cardholders: Contrary to popular belief, supplementary cardholders get to enjoy the same set of benefits that are provided to a primary cardholder. From air miles to cashback offers to fuel surcharge, supplementary cardholders receive the same benefits that the primary cardholders enjoy. Most banks even allow the supplementary cardholders to earn airport lounge visits (depending on the credit limit, expenditure made on the card and maintenance of the card).
  
• Cash withdrawal facility on supplementary cards: Supplementary cardholders can withdraw cash from an ATM using their credit card any time of the day. However, the limit of cash withdrawal will be the same as that of the original credit card. In some cases, the banks set a lesser cash withdrawal limit.
  
• Monitoring usage: The primary cardholder can monitor the usage of the supplementary cards. In case the primary cardholder has given supplementary cards to family members who are dependent on them like their children, they can keep a check on their spending habits. In fact, if the primary cardholder wishes to set a separate credit limit on the supplementary card, they can do that as well.
  
• Credit limit – In most cases, the credit limit on a supplementary card is the same as that of the primary credit card. However, at times, some banks might allow a lesser credit limit to a supplementary card (in comparison to the primary credit card). For example, if a cardholder has been issued five supplementary cards and their primary credit limit is Rs.2 lakh, the sub-limit for their supplementary card should be distributed equally amongst all the add-on cards. So, the cardholders will be entitled to a limit of Rs.40,000 on each of their add-on cards. Similar sub-limits will imply on their cash withdrawal also.
  
• Fee: Most banks in the country do not levy any charges to issue a supplementary card. In fact, at times, banks issue supplementary cards as a complementary service. However, there is a limit to the number of free supplementary cards that a primary cardholder can apply for. A few banks charge a certain amount of money to issue more than four supplementary cards. Also, most banks waive the annual fee of the supplementary cards.
  
• Statements of supplementary cards: Every bank that issues a supplementary card generates a consolidated statement of account that includes the expenditure made on the primary card as well. This not only makes tracking easy, it also helps in keeping a check on the expenditure made on each and every card. These statements can be obtained in hard copy as well as via email. Most banks do not charge their customers for availing this service.
  
• Payment of balance on the supplementary card: While expenditure made on supplementary cards are individual, payment of the outstanding amount must be done through the primary card. Cardholders, both primary and supplementary, are expected to pay the consolidated outstanding balance together. The due date of the same is also the same. In case of delay in payment or failure to make a payment, the primary cardholder will be held responsible.
  

While supplementary cards ensure the financial freedom of the family members of the primary cardholders, it is also important to be meticulous when it comes to their maintenance. Any negligence in terms of payment of the outstanding amount can affect the credit score of the primary cardholder. Hence, while getting supplementary cards for the family, the primary cardholder should make sure that the add-on cards are maintained with as much care as the parent card itself.  

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