You may have seen advertisements by banks and finance companies touting ‘free credit cards’. This probably makes you wonder if there’s a catch somewhere. You wonder if credit cards are actually free, and if this is the case, why do banks take the time and effort to issue such cards? Whether you have to pay charges, fees, interest rates, etc. related to your card depends on you, the cardholder. 

That may not be completely true, as certain fees on specific credit cards are mandated by card issuers. Nonetheless, using your card wisely and being savvy will result in you avoiding many charges on your card. 

This makes it practically free of cost to you. A credit card can offer many advantages in the form of rewards, cash back, and discounts. A free credit card is called such because some charges, like annual fees, may be waived off. Nonetheless, this waiver is not always permanent and is usually part of an introductory incentive by card issuers. 

There are safe ways to use your card so that you don’t have to pay additional fees and charges. You should know about the typical charges linked to credit card use so that you can avoid these and safely use your card. 

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Annual Fees

It is common for most credit cards to charge annual fees. Nonetheless, these fees are waived off when credit cards are newly issued. This is done by card issuers as an incentive to a cardholder. The waiver is usually for the first year of card use only, after which the annual fee kicks in. Furthermore, card issuers may waive annual fees on a card if they discover that the cardholder uses the card frequently, and achieves minimum spending on the card. For instance, the HDFC Bank Visa Signature Credit Card waives off the annual fee of the card if you spend 15,000 INR using the card within three months of the date of issue. In other cases, annual fees may be waived off if you’re a creditworthy or high-net-worth client. You may get offers of a new credit card without having to pay joining fees, and zero annual fees. This is a free card that you get in the truest sense. 

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Finance Charges

Finance charges include any charges that banks and card issuers charge customers, such as interest rates, processing fees, delayed payment fees, etc. Finance charges are related to the way in which you, the cardholder, uses the card. They can be completely avoided depending on your own spending behavior. Your credit card gives you 30 – 50 days of interest-free credit after which you must settle your bill.

In case you don’t pay your bill on time or don’t pay it in full, your credit card balance will be carried forward to the next billing cycle, and your bank will charge you interest on the outstanding amount. The interest rates charged vary from card to card, so while choosing your card, the safest bet would be to select one with a low-interest rate. Safer still would be to pay your total outstanding bill on time. Banks also charge a late payment fee in addition to interest. As far as processing fees go, in case you use your credit card for cash withdrawals at ATMs, you may be charged a fee for each transaction. While choosing a credit card, you may find that some card issuers waive this off as well for a certain number of transactions. 

Choosing Credit Cards Smartly

By choosing your credit card smartly, and using it in a savvy manner, you can make your credit card a lifetime free card. The safest way to select a credit card is to choose one that offers low interest rates, besides nominal fees for other aspects of card use. Picking a credit card that offers no-cost EMI payment options like the Bajaj Finserv RBL Bank Credit Card is also a safe way to get a free card. This card also offers you interest-free ATM use for a fifty-day period. 

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