Credit cards are a simple method to manage your finances, get incentives, and obtain credit. However, understanding the various costs connected with them is critical when choosing a card. In India, where the market is swamped with possibilities, being aware of expenses such as yearly charges, late fees, and international transaction fees may save you from unexpected expenditures and help optimise your credit card experience.

    Common credit card fees

    Annual fees

    ⮚ Definition and rationale

    The credit card holder is charged an annual fee, which is meant to cover the cost of the benefits and services provided by the credit card. Such charges are more prevalent on high-end credit cards that offer a lot of value. Benefits may include access to reward programs, airport lounges, exclusive discounts, concierge services, and higher cashback rates. The cost is only reasonable considering the benefits that these cards offer.

    Example with American Express

    In India, American Express credit cards are the symbol of premium services. For instance, the American Express Platinum Card demands an annual payment, which in turn provides comprehensive travel insurance, passage to global airport lounges, exclusive memberships, and VIP travel benefits. This fee reflects the high-end services and privileges that are intended for those who are affluent and want to experience luxury and ease in their financial services.

    Late payment fees

    Consequences of missing payments

    Late payment fees are incurred upon failure to make the minimum payment by the due date. These fees are critical for several reasons: they act as a late payment penalty, which encourages timely payments and covers the risk and administrative costs of a delayed collection. Primarily, late payments negatively influence your credit score and cause difficulties when obtaining further credit in the future.

    Strategies to manage late payment risks

    To successfully achieve this, cardholders can employ several strategies. Establishing payment reminders or automating your payment process through standing instructions from your bank account prevents you from forgetting to make payments. For example, American Express provides an easy setup for automatic payments and online tools for managing your spending and paying, preventing you from those unnecessary charges.

    Foreign transaction fees

    ⮚ Understanding foreign transaction fees

    Every time you use your credit card for purchases in a foreign currency or on foreign territory, you are charged a foreign transaction fee. The ranges of these fees are usually between 1 and 3 per cent of the transaction amount. They bear the burden of currency conversion and the processing of international transactions, which are more complex and expensive for credit issuers.

    Considerations for international usage

    For regular travellers or online shoppers from abroad, the selection of cards is the deciding factor. Cards like American Express charge a foreign transaction fee that may have to be included in the total cost of travelling abroad or buying from abroad. Examining each card for these costs can bring about huge savings. Such cards, designed for travellers, can have no lower foreign transaction fees to appreciate them more.

    Cash advance fees

    What it is

    This fee is incurred when a credit card is withdrawn through a cash machine. Cash advances work differently from regular purchases and do not have a deferred payment period, meaning interest is charged from the day the transaction is made.


    Cash advance fees are normally a percentage of the money taken out, usually around 2-3% however, they can be higher. As interest rates on cash advances pile up faster, one should avoid using this option frequently.

    Balance transfer fees

    ⮚ What it is

    By transferring your credit card’s balance from one card to another, usually to benefit from a lower interest rate, the credit card company may impose a balance transfer fee. This fee usually is a percentage of the transferred amount.

    ⮚ Managing Costs

    This fee is usually between 1% and 3% of the transferred amount. Before proceeding with a balance transfer, it’s essential to calculate whether the interest savings will outweigh the cost of this fee. Some credit cards put a promotional period with a low balance transfer, or no balance transfer fees which is a huge advantage.

    Over-limit fees

    ⮚ What it is

    When your spending exceeds the credit limit set on your card, you are charged with over-limit fees. Not all cards charge an over-limit fee, and the practice can differ based on the card issuer’s policies and the regulatory framework they operate under.

    ⮚ Avoidance tips

    To avoid incurring over-limit fees, check your credit card balance regularly and set alerts to notify you when you approach your credit limit. Additionally, you can opt out of over-limit protection, which means that transactions that would put you over the limit are simply declined.

    American Express credit card eligibility 

    Read on to know the American Express credit card eligibility

    Income requirements

    You must have a minimum salary to be able to apply for an American Express credit card in India. The amount of salary is different for different cards. To illustrate, high credit cards are designed for people with higher income, who receive better conditions and higher credit limits.

    ⮚ Credit history and score

    A good credit history and credit score are the major parameters that determine the card’s approval. Such factors show the lender how reliable and financially responsible you are. They affect not only the approval of credit but also the terms of credit.

    ⮚ Age and employment criteria

    Applicants must be at least 18 years old. Employed individuals must provide a contract of employment, while self-employed applicants need to verify consistent business success. These standards make sure that a cardholder has the financial strength to deal with credit appropriately.

    Ending note

    Understanding the costs connected with credit cards, particularly premium cards like those offered by American Express, is critical for making an informed choice. By being aware of these fees, you may select a credit card that is appropriate for your financial habits and goals. Remember that the correct credit card does more than simply provide credit; it also compliments your financial plan and lifestyle requirements. Always read the tiny print, evaluate how you’ll use the card, and weigh any costs against the benefits you hope to acquire. Choosing intelligently might help you avoid surprises and make the best use of your credit card.