Over the years, credit cards have played a major role in a spendthrift’s life. Be it in the US or in India, credit cards have eased people’s lives in terms of expenses. Nobody really bats an eyelid before swiping his or her credit card for an impulsive purchase even if their savings account has no funds. If you carry your balances, you need to worry about the interest rate that you are paying on your card. Timely payments, low balances and good credit scores contributes to your credentials as a customer, which earns you favor from your credit card company eventually.

Nevertheless, now the scenario is changing gradually with credit card companies becoming stringent with their clients in terms of offering debt. People who expect their credit card companies to give them a higher line of credit are mistaken as the tide has turned. We don’t know how much impact it will have here in India, but in the US it’s getting slightly difficult now with the new set of rules.

Earlier, people in the US maintained their credit scores by making timely payments, paying off their balances in full and taking lesser cash advances, but now they would need to curtail their expenses. Whether it was home renovation, wedding, holiday or any sort of loan, a low promotional rate on your credit card could easily win you your dream.

The core objective behind the change is increasing debt and default. The banks need to take an action in order to control debt, which would eventually lead to better financial system.

Unless people do not get out of debt, they cannot save or invest. If people wouldn’t invest, economy wouldn’t grow. So, now the good credit score would be determined by the least debt on an account or no debt at all.

Therefore, for a healthy economy, credit card companies are inclined towards increasing productivity and lessening default and debt by limiting customer leverages.

We all are aware that credit cards make our lives easy as we can swipe them anytime and get the thing we desire. It’s much simpler to use a credit card than carry cash. Besides, you are able to splurge even when you don’t have enough cash available in your bank account. Nonetheless, people who use credit cards need to be familiar with several fees that come along with it. As spending is part of your financial life, so is saving and investing. If an individual ends up paying oodles of fees in the form of finance charges or hidden fees, what would he have left to save and invest? So, you need to be cautious about what you are paying on your credit card. The nature of the fee is also crucial in determining as to whether it can be slashed or evaded, which makes it essential for a card owner to vigilantly look at the accurate item.

The basic fee that you need to pay is the joining fee or the membership fee, which can easily be avoided as banks compete to lure new customers. Most of the credit cards are offered without any membership fee. Nevertheless, there are premium cards, where you need to pay a membership fee. These fees have to be taken as a fact that they are one-time fees, which will have to be paid only once. Some banks charge annual fees for the credit card usage on a yearly basis, which is an annual outlay that along with a service tax gives the entire levy. A card member can either get the fees revoked if possible or choose a card with no annual fees in order to minimize or abolish this cost. This will reduce the cardholder’s accountability. So, if you want to own a credit card, make sure you get a zero annual fee card to get rid of the costs. Another alternative is to make a one-time payment and change the card into a lifetime one, whereby no annual fees will be applied over the span of the card. Besides the joining fee and the annual fee, there are other fees and costs that are levied on a credit card. You need to be aware of the term, service tax. Service charges are unlike the service tax that is charged by the law. Non-payment on credit cards provokes a penalty. Likewise, in case the payment is made late, a card member has to pay a late fee along with the finance charges that are billed for the number of days the payment was not received. Such charges altogether are known as service charges. The best approach to steer clear of such fees is to make sure that there is an incessant payment of the credit card dues.

Finance charges are levied on your card when you pay just the minimum due every month and revolve your total due. Depending on the rate of interest on your credit card, your bank bills you finance charges. Instead of paying huge finance charges, its better to pay in full every month and get rid of unnecessary finance charges.

So, it’s the membership fee, annual fee, late fee and the finance charges that add up on your credit card, which can take away the substantial part of your funds that could be potentially saved or invested.