A credit card is plastic money which allows you to spend now and pay later. A lot of people use a credit card as it serves as an emergency fund. Unfortunately, not everyone knows how a credit card works. Many citizens believe credit card is nothing but spending now and paying later. A credit card is much more. This lack of knowledge among people on credit cards is the root cause of getting cheated.
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As people using credit cards increase, credit card complaints also rise. Even though many users pay their credit card bills on time, there will be a lot of issues with the credit card. The complaint against banks and credit card companies include complaints on credit card bill payment, complaints against credit card charges, complaints against credit card chargeback’s, complaints on credit card transaction getting declined, and complaints on fraudulent transactions and so on.
See Also: Credit Card Safety Tips
1. Charges and penalties
Credit cards are really good only when you use them with care. Otherwise, it’s a financial disaster. Banks cheat credit card holders by levying various charges and penalties.
a) Late payment charges
If the credit card bill is not paid within the due date, banks levy late payment charges on customers. This charge is over and above the interest charged on the outstanding dues. Amount charged varies from bank to bank. Usually, it will be a fixed sum or a certain percentage of the outstanding balance with a minimum and maximum threshold.
b) Charges on cash withdrawals
You should never use your credit card to withdraw cash at an ATM. If you withdraw cash using your credit card, banks will make money out of it. Yes, you will be charged high interest if you withdraw cash using your credit card. Cash withdrawal charges vary from 2.5% to 3% of the withdrawn amount, subject to a minimum amount of Rs 300 to Rs 500. Not just that, even you won't enjoy an interest-free period. You will be charged interest from the very next day.
c) Charges for crossing the credit limit
You might be aware on what credit limit is. It is the maximum amount you can spend using your credit card. Banks fix credit limit on the basis of your income. If your income is high, you will be given a high credit limit. If at all you cross the credit limit, you will be charged extra money by your bank.
Many people instead of settling the full credit card bill on the due date, simply pay the minimum amount due to escape from the late payment charges. The minimum amount due is the minimum amount you have to pay your bank by the due date. This will usually be 3% of the outstanding amount. Many people are not aware of the fact that paying the minimum amount due on the credit card just saves them from the late payment charges, not from paying interest on the outstanding balance.
See Also: Types of Frauds in Credit Cards
Paying minimum balance on the credit card is a trick played by the banks to cheat customers. If this option were not there, credit card holders would have cleared all the credit card dues within the given date. Because of this option they tend to postpone it.