Credit card can be an expensive credit tool if not used properly. This is because it has many charges that can easily bog you down in financial crisis and destroy your credit rating. Here are some of the most important charges that accompany credit card.

• Late payment fee: When you get your credit card bill, you are given a due date by which you have to pay the outstanding amount. If you fail to pay the amount by this date, you end up paying late payment fee.
• Finance charges: When you use your credit card for making the payment, you are in effect taking an overdraft, which is a type of loan from the bank. You get an interest-free period during which you can pay off this amount. If you don’t pay the full amount by this date, the unpaid amount along with new purchases attracts finance charges. This rate can be as high as 45%, thereby leading you to debt trap.
• Cheque bouncing charge: If your payment cheque bounces, you end up paying this charge along with late payment fee.
• Cash withdrawal charges: Every credit card allows you to withdraw cash from ATMs in case of emergency. But remember, unlike the cash withdrawal using debit card, the cash withdrawal using credit card attracts cash withdrawal charges. So it is advisable to use credit card for cash withdrawal sparingly.
• Annual charges: While most entry-level cards don’t have any annual fees, the hi-end cards charge annual fees. These fees can be very high. So you need to watch out for these fees before deciding to take one.