How do banks cheat you with a credit cards?

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A credit card is plastic money that you can spend now and pay later. Many people use credit cards because it serves as an emergency fund. Unfortunately, not everyone knows how a credit card works. Many citizens believe that 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 leading cause of getting cheated.

Credit card complaints:

As the number of Complaints users increases, credit card complaints also rise. Although 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 includes complaints about the payment of bills, complaints against credit card fees, complaints about credit card chargeback’s, complaints on transactions getting declined, and complaints about fraudulent transactions and so on.

How do banks cheat you with a credit card?

1. Fees and penalties

Credit cards are only really good if you use them carefully. Otherwise, it is a financial disaster. Banks trick credit card holders by charging various fees and penalties.

a) Charges for late payment

If the credit card bill is not paid within the due date, banks charge the customer for late payments. This fee is over and above the interest on the outstanding dues. The calculated amount varies from bank to bank. It is usually a fixed amount 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 from an ATM. When you withdraw money with your credit card, banks make money from it. Yes, you will be charged high interest rates if you withdraw cash with your credit card. The charges of cash withdrawals vary between 2.5% and 3% of the withdrawn amount, with a minimum of Rs 300 to Rs 500.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 exceeding the credit limit

You may know what the credit limit is. It is the maximum amount you can spend with your credit card. Banks set the credit limit based on your income. If your income is high, you get a high credit limit. If at all you cross the credit limit, your bank will charge you extra money.

2. Minimal balance trap

Instead of settling the full credit card bill on the due date, many people 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 on the due date. This usually is 3% of the outstanding amount. Many people are unaware that paying the minimum amount due for the credit card protects them from late payment fees and not from interest on the outstanding amount.

Paying the minimum balance on the credit card is a trick of the banks to cheat customers. If this option were not available there, credit card holders would have credited all credit card dues within the specified date. Because of this option, they tend to postpone it.

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