Credit Card Late Payment Charges: Finance charges are a fixed charge levied on the outstanding amount on the credit card. This includes loan interest cost, account maintenance fee, late fee and transaction fee.
Credit Card Late Payment Charges: Before applying for a credit card, you should pay attention to certain things. It is important to be aware of these charges, which include annual charges, renewal fees, add-on card charges and transaction charges. You should also be aware of the interest and late payment charges.
While using a credit card, you must pay on time to avoid late payment penalties. But if you make late payment, then understand the calculation of how much will be charged.
What are finance charges
Finance charges are a fixed charge levied on the outstanding amount on the credit card. This includes loan interest cost, account maintenance fee, late fee and transaction fee.
Late fee charges
Late fee charges differ from bank to bank.
SBI Credit Card :-
- Rs 400 on balance between 501 to 1000
- Rs 750 on balance between Rs 1001 and Rs 10000
- Rs 950 on balance between Rs 10001 to Rs 25000
- Rs 1100 on balance between Rs 25001 to Rs 50000
- Rs.1300 on balance amount above Rs.5000
You can check how much your bank will charge late fee by visiting its site.
Interest Free Period and Monthly Interest Rate
All credit cards come with interest-free period offers varying from 20 to 50 days. However, in some cases, the credit card interest rate is applicable, especially when you do not pay your credit card amount in full, or when you withdraw cash using your card.
Explain that companies charge monthly interest on credit cards. This interest rate varies from bank to bank.
Explain that companies charge monthly interest on credit cards. This interest rate varies from bank to bank.
This is the calculation formula
Banks calculate the interest rate as a monthly percentage, which varies according to RBI instructions and the average daily balance method.
Formula to calculate interest = outstanding amount x monthly percentage x 12 months x number of days/365
This is how calculation is done
The calculation of interest also depends on the grace period extended by banks across India. Generally, the grace period is a period consisting of the initial grant period and an additional 20 days (grace period). Late payment charges can be avoided if the payment is made during the grace period.
