Credit Card Fees, Charges and Taxes! Charges that you Should Aware of in your

Credit Card

Owning a credit card is an easy thing but how to use it properly can be quite tricky. It’s not about swiping your card to your heart’s content but how you manage your expenses and avoiding unnecessary charges. This comes in many forms or what the credit provider will call credit card fees, charges or taxes.

Here’s a fact that you need to know first before we discuss further. One of the countries with the highest interest rate worldwide is the Philippines. The reason behind this is because the Philippines do not have a ceiling for credit card interest rate. Credit card companies can easily charge 2-5% monthly interest and mounting up to 24-60% per annum.

When you sign the terms and agreement of your credit card, there are provisions that pertain to the manner in which payment should be done. If you fail to abide by the agreement, penalties are then reflected in your billing. This creates additional charges such as late payment charges and additional interest. The simple solution is to pay your debt on time.

So here’s a list of credit card fees that you should be aware of.

Membership Fee – usually an annual fee for maintenance and management of the card. It cost around PHP 900 to PHP 5,000 depending on the type of card. It can also be waived depending on the type of credit card.

Finance Charge – this is the monthly interest fee for using your credit card. The cost is based on the card’s Annual Percent Rate or APR, the process of calculation of the finance charge and your balance. Usually in the range of 3%- 3.5%

Cash Advance Fee – cash advances made through your credit card will have a corresponding fee. The cost of the fee depends on the amount of the cash advance but usually in the range of 1%-5% or a specified amount whichever is higher.

Late Fee – unable to pay on time or paying less than the minimum payment allowed or both can result to this kind of charge. The cost could be a specified amount or 5%-7.5% or whichever is higher.

Over Credit Limit Fee – expending beyond your credit limit will also result to this kind of charge. A flat rate of PHP 500 will be charged to your account.

Foreign Currency Conversion Fee – using your credit card outside the Philippines will produce another charge in your account. The bank will convert the amount to peso and the cost of this will be in the range of 2.0% -3.5% of the converted amount.

There are also other credit card fees like Return Check Fee, Sales Slip Retrieval Fee, Card Replacement Fee, Balance Transfer Fee and Cancellation Processing Fee.

Having the knowledge of the different credit card fees will help you understand how to use your credit card wisely. So don’t just swipe that card like there’s no tomorrow, use it wisely!

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