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15 Important Tips To Avoid Paying Any Extra Fees In Your Credit Card Bills

15 Important Tips To Avoid Paying Any Extra Fees In Your Credit Card Bills

15 Important Tips To Avoid Paying Any Extra Fees In Your Credit Card Bills

Nobody, especially you, doesn’t want to see some surprise fees or interests in your monthly credit card statement when your budget is tight. In this post, you will know why there are extra fees and interests in your credit card statement and some of the very important tips you should do to avoid paying any kind of extra fees to your credit card company.

15 Tips To Avoid Paying Any Extra Fees In Your Credit Card Bills

Before directly knowing the 15 tips, you will need to know why you are getting extra fees and there is always some extra statement that you don’t recognize in your credit card statement. It is just like any other problem. In order to solve a problem, you must understand why you are paying interest and other extra fees in your credit card bill.

1. Not paying off full amount

Don’t mind me saying this but not paying the full amount every month on your credit card bill is one of the dumbest and biggest mistakes in managing your finance. When a credit card statement arrives every month, it has two main points: Total amount due and minimum amount due. Most people somehow are attracted to thinking that paying the minimum amount is fine. Paying the only minimum amount due is one of the biggest financial traps.

Let’s say your total due amount is Rs. 10000 and the minimum due amount is Rs. 500 (usually 5% of the total amount) and you are not using further this card. Now, Rs. 9500 remains to be paid. You might be thinking that next month, the statement will be like: total amount due: 9500, minimum due amount: 475 then you are horribly wrong. The bank will charge you interest of around 3% (usually) every month compounded. So, the next statement will be like the total due amount: 9500+285=9785 and the minimum amount due: 489.25. If you are again paying the minimum due amount, then, your next month’s bill will be like, provided you are not using the card for any other transaction, total due amount: 9295.75+278.8725=9574.6225 and minimum amount due: 478.73. If you keep paying only the minimum due amount, then you are incurring unnecessary extra interests on your due amount. Just in two months, you are paying around Rs. 563.8725 as interest.

If you are avoiding even paying the minimum amount due, then you will get another fee called late payment fee on top of the interests. This is how banks make money on your credit card. By not paying even the minimum amount, your credit scored will be affected highly negative. In a sentence, always pay off your total amount due every month whenever possible.

2. Using your credit card beyond credit limit

Every credit card has a credit limit provided by the bank based on your income and credit history. Using more than the limit provided will invite additional over-usage fees from the bank in your next billing cycle. Some banks outright reject any transactions if that transaction will result in the overuse of your credit limit. Some bank requires you to call them and take prior permission. Most banks will have a tier-based fee whenever you crossed your credit limit.

For example, your credit limit is Rs. 50000 and you have spent more than Rs. 50,000. Banks will charge you depending on how much more you are using beyond your credit limit. Like, if your excess amount is below Rs. 500, banks may not charge at all. If the excess amount is within 500 to 5000, banks may charge Rs. 300 and so-on.

So, never try to use it beyond your credit limit. But, I do understand that sometimes, you need to use beyond the credit limit like getting one time offer of a product you have been watching is just 2k more than your limit. Or you need to use it for some very important reason. In such cases, there are some tricks, you can apply so that you can avoid the above extra fees. Regarding this, I have written a blog post about how to temporarily increase your credit limit without any fees. Click here to read the post or follow the link below to read it. This method works with every bank like Axis bank, HDFC bank, SBI bank, CitiBank, Canara bank, etc.

3. Withdrawing cash in ATM using credit card

Withdrawing cash using your credit card in ATM is also one of the biggest and most common mistakes many users do. Most banks will offer you an instant cash withdrawal facility on your credit cards. This should be used ONLY when it is absolutely necessary, something like your life depends on it. Withdrawing cash using a credit card has the highest possible fee in a credit card transaction. Unlike any other normal transactions, there are three major fees involved in a cash withdrawal using a credit card. Let’s look at them one by one.

Cash advanced fee

This is the fee bank charges for withdrawing cash which is usually between 2-5% of the withdrawal amount with a minimum fee of around Rs. 300-500. This will be shown in your next bill.


Unlike a regular transaction that has an interest-free grace period, the cash withdrawal doesn’t have any such period. Interest charges start the day you withdraw cash that is usually at a rate of 3-5% per month.

Late payment fee

Just like any other conditions, there will be late payment fee whenever you fails to pay the due amount on time.

In short, if you are withdrawing cash using your credit card, you are inviting a lot of fees on top of other fees. Never ever withdraw cash using your credit card.

4. Booking railway tickets using credit cards

Most of the credit cards will have a railway surcharge which is extra from the normal transaction charges from IRCTC. That’s why you should always check what is your railway surcharge fee rate. If possible look for cards that exempt this charge or never book a railway ticket using credit cards. The fee for booking railway tickets using credit cards as surcharges ranges from ~0.28% to 2.5%. This is a big amount if you are a frequent user. Just opt for other payment options.

5. Use your credit card at oil pumps

Same as the payments in IRCTC using credit cards, there is a surcharge for paying in oil pumps using credit cards. There are some cards that waive the fuel surcharge but pay close attention to minute details. It may offer the exemption up to a certain limit or if you fuel certain amounts, etc. It is best you pay using debit cards or cash.

6. Too many cards & lost track

Yes! There is so much a person can handle. Sometimes you have so many cards that you forgot you had that one. By doing so, you are inviting yourself unnecessary fees. Most of the cards have yearly fees. If you are not paying attention, then chances are high that the annual fee remains unpaid. This means the interest on the unpaid fees. So, it is best that you constantly check your cards and keep to a limit where you can manage them all.

One of the best ways to prevent this is always to take credit cards without any annual fees. My favorites are the ICICI Amazon Pay credit card and ICICI coral credit cards. Any credit cards you take against any FD will be most likely free.

Another way is using services like CRED and IND Money to track all your credit card bills and portfolio to avoid unnecessary fees. A better explanation is given below in the next point. For tracking your credit card bills use CRED. If you want to track all your investments like mutual funds, stocks, PPF, FD, etc. use IND Money. Click the link below to install IND Money and use CODE SAPA5G89 to get extra 200 IND coins which you can invest in US Stocks. I also get 200 IND Coins.

Click here to install IND Money and get 200 IND Coins. [USE YOUR SMARTPHONE TO INSTALL]

7. Not using CRED 🙂

If you haven’t watched one of the CRED’s ads, then you are living in another planet. Check out Rahul Dravid’s latest ad for CRED which went viral.

CRED provides you the lists of credit cards you have. It will show you how much money each card is due and when to pay. It will also show any hidden fees and any unpaid dues from previous cycle. Whenever you pay a bill, you will receive CRED coins and cashbacks. Using CRED Coin, you can participate in contests and win big prizes all for free. Check out my detailed CRED review.

8. Not redeeming your reward points.

This is not directly paying extra fees but not getting what you can. Did you know that you earn some reward points each time you use your credit cards. For state bank of India, it is called state bank rewards, for ICICI bank it is credited as payback points. Other banks have other rewards and different names but the concept is same. You will get around 1-5% of the amount you spent in the form of reward points. These reward points have an expiry date and if you didn’t redeem it before the expiry date, it is gone forever. In a sense you are indirectly paying extra by not collecting the reward points. You can redeem these reward points as amazon gift cards, flipkart gift cards, clothing items and even high end smartphones if you have enough points.

9. Buying products through EMI unnecessarily

If you are buying any product through EMI when you can directly pay the full amount, then you are paying extra interest plus GST. Everyone knows that you are paying interest but the 18% GST on the interest becomes a huge amount when you add it for years. If you are thinking of buying through No-Cost EMI, you will not pay any GST, then you have mistaken the process. Read the next point carefully to stop paying any unnecessary extra fees related to EMI on credit card.

10. Buying products through No-cost EMI unnecessarily

If you are thinking that No-Cost EMI means there is no cost then you should read my post about everything you need to know about No-Cost EMI by clicking here. It discusses some hidden costs, the real meaning of No-Cost, etc. You should definitely check it out. The main thing is the GST on the interest you are paying even though it says No-Cost. Technically you are not paying any interest but you are paying the GST on the interest.

11. Paying at merchants with higher credit card fees

Just like the railway tickets and oil pumps, there are certain merchants in your local malls, that charge a little more on credit cards than the debit cards and UPI payments. This is because the payment provider charges a little more on credit cards than other payment methods. Make sure you ask if the rates are same. Generally it will be same unless they specify it.

12. Pay using credit cards at SBI Collect

This is related to the above point. SBI Collect is one of the services provided by the State Bank of India which enables businesses, schools, and other governmental institutions to collect fees from clients, students, etc. If you are paying with SBI debit cards and internet banking, there will be a minimum charge like Rs. 10 but if you opt for any credit cards, you will be charge from Rs. 200 to Rs. 1000. Choose credit card only if it is absolutely necessary.

13. Transfer money to wallet services like PayTm

PayTm keeps changing the policy of depositing money to its wallet by using credit card. Even if it is allowing you to deposit liquid cash using credit cards, there is an extra fee for doing so. There is a minimum of 2% if you deposit money using credit cards. That fee is the extra fee you are paying. Avoid trying your credit card balance to hard cold cash at any cost.

14. Paying credit card bills using another credit card

Just like adding money to PayTm bank, paying credit card bills using another credit card has extra fees. Try avoiding to avoid paying extra fees. If you are thinking that everyone knows this, then think about a new user and s/he is just trying to pay bills without knowing that there is a fee. It is best you inform the new users.

15. Not paying your credit card bills

I kept this as the last point because this is a very obvious point that everyone knows but not everyone can maintain this due to many reasons. The first golden rule is paying your credit card bills even if it is just the minimum one. Not paying the minimum will cause extra fees on top of the interest.

How to avoid penalty in credit card?

You can avoid any kind of penalty in credit card by regularly paying your bills in full amount, avoid taking unnecessary EMIs, make sure you keep in tab of all the credit cards by using the CRED App. On top of these points, make sure you have followed the above 15 points on how to avoid paying any extra fees while using a credit card.

How to stop interest on credit card debt?

There is no way to stop interest on credit card debt except you pay off the credit card debt in full amount. Just make sure you pay your credit card bills in full amount every time to avoid incurring debt interest in the first place. This is same for every banks like SBI, Axis, ICICI, HDFC, PNB,Citi bank, etc.

How to save interest on credit cards?

The only way to save interest on credit cards is not to incur any interest in the first place. Just pay off the credit card bills every month. However, due to some reason, if you are not able to pay off the bills regularly, then you can try reducing the interest rate. The first method is taking a personal loan and pay off the credit card debt in full. Generally, personal loans have an interest rate of around 12-23%. While credit card interest ranges from 3-6% per month which is the same is 36-72% per year. This means you are saving around 24-49% on the interest rate. Another way is settling the debt with your bank which is unlikely.

When are you charged interest on a credit card?

You are charged interest on a credit card when you fail to pay your monthly credit card bills in full amount. Let’s say you have to pay Rs. 10000 but you only managed to pay Rs. 5000 for a particular month. Bank will start charging interest for the remaining Rs. 5000 from the next day of the due date at a rate of around 3-6% per month.

How to pay credit card bill without interest?

When should I pay My credit card bill to avoid interest? Paying credit card bills without any interests is very easy by paying off the credit card bills every month in full due amount before the due date. There are due dates in your credit card statement for every month. One is the statement generation date and another one is the due date. The statement is of the last 30 days before the generation date and the due date is the date where you need to pay the due amount before the bank starts charging interest. There is generally a 15 days grace period from the statement generation date. During that 15 days period, you can pay anytime before the 15 days to avoid paying any extra interest.

How to avoid paying any fees to a credit card company?

The first step of avoiding any fees to a credit card company is getting a credit card with no annual fees (no strings attached). The second step is paying off the credit card bill in full amount before the due date. The third step is never to use the card above the credit limit. The fourth step is to stop using EMI transactions whenever possible. You are good to go.

What happens if you make the minimum payment every month?

If you make only the minimum payment every month, the bank will continue charging interest on the principal amount and the interest you incurred last month in compound interest. If you continue doing this, you will be drown in debt within a very short period of time.

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