Most of us start using credit cards because we see others using it, which could be deceiving. Experts suggest people should not forget that credit cards do not put extra money at one’s disposal. It allows you to borrow for free, provided you repay it within the due date. However, what we don’t understand are the charges that come along with it. Though they are not exactly hidden charges, after you start using it, the surprises come in. The various charges charged on your card also depend on the type of card you hold. Customers should be aware that each bank has their respective practice on the late payment charges.
For instance, Citi credit card is currently revising their credit card charges. The late payment charges and its calculation methodology applicable on Citi credit card are being revised. The change will be effective from 27th February 2019.
Late payment charges are levied in case of non-payment of the minimum amount due of the last statement cycle till the payment due date along with the grace period. The Citibank statement says the changes have been done to ensure that the transactions that are not part of the billed statements are not considered for charging LPC. The revised late payment charges will be applicable for Rewards, Cashback, IOC and First Citizen cards. The Late Payment Charges (LPC) will be levied on the total amount due as per the latest statement instead of the current outstanding as on date of levy of the charge, after 27th of February.
According to the revised charges, for a billed amount up to Rs 1,000, you will not be charged with anything as LPC. The bank says, to avoid inconvenience to customers who missed a payment on small balances, a minimum balance cut-off of Rs 1,000 is introduced. If the last billed balance is less than Rs 1,000, then no LPC fees will be charged to the customer. For billed amount between Rs 1,000 and Rs 5,000, you will be charged Rs 450, Rs 700 for a billed amount between Rs 5,000 and Rs 10,000, and Rs 950 for a billed amount above Rs 10,000, as LPC.
For instance, if your statement cycle is on the 18th of every month, and if you have a due amount of Rs 10,000 for a purchase made between 1st September 2018 – 1st December 2019, your due date will be on 4th of April 2019. In between, before April 2019, you make a purchase of Rs. 20,000. If you do not make any payment till April 2019, you will be charged Rs. 700 as late payment fees. This fees will be levied basis billed balance of Rs. 10,000, which also can vary dependent on the card type that you hold. As of April 2019, you will have an amount due of Rs 31,416 which will include purchases made of Rs 10,000 and 20,000 along with LPC Rs 700, the interest of Rs 500 and Rs 216 as GST on LPC and interest at 18 per cent. The purchase of Rs. 20,000 will not be included for consideration of late payment charges.