THERE are a lot of hidden costs on that credit card you own and if you aren't watchful enough, your monthly statement may shock you.
Here is a checklist on when and how your lender can slash you with charges.
You have an overdue payment
If you don't settle the minimum amount due by the due date, you would end up paying a late payment fee. This fee varies from bank to bank.
What if you don't pay your minimum amount due for two consecutive months? You become a defaulter. The course of action after that depends on the outstanding amount on your card and past track record. The bank will assign you a risk score, depending on which, the collection strategy changes. Also, any further transactions on your card will be blocked.
You revolve your balance Banks give you this option to pay a minimum amount by the due date and carry forward the rest to the next billing period. In this case, you will pay an interest on the amount that you carry forward.
There's another catch: when you carry a balance from month to month, you do not get any 'interest free' period on new purchases you make.
Your payment cheque bounces If you pay your bill by cheque and it bounces, you would have to bear a fee for dishonoured cheques. Also, if this payment is made very close to or after the due date, you might be in for more trouble.
The bank may not only increase your risk profile but also beyond the due date, you will have to bear all sorts of charges. This means, a fee for a bounced cheque plus a late payment fee and also a monthly interest on the outstanding amount!
