How to avoid hidden fees in 'lifetime free' credit cards
What's the story
Credit cards branded as "lifetime free" may seem like a great deal with no joining or annual fee and rewards. However, many users later find out that these cards aren't completely free of cost. Banks and issuers often don't clearly mention additional charges that could apply, which can accumulate if you're not careful. This article explains common additional charges associated with lifetime free credit cards and how to avoid them.
Terms
What 'lifetime free' really means
The term 'lifetime free' usually means that banks waive the annual and joining fee for the entire duration of the card's validity. However, this doesn't mean there are no charges for cash withdrawals, late payments, foreign currency transactions, add-on cards or reward redemptions. The terms can vary from one bank to another, so it is important to read the Most Important Terms and Conditions (MITC) associated with your credit card.
Cost accumulation
How small fees can add up
Small charges can quickly add up with lifetime free credit cards. For instance, if you buy something worth ₹20,000 from a foreign merchant, you could end up paying around ₹600 extra due to forex markup. If you miss your bill by two days, a late fee would also be added to the total amount due, reducing or offsetting any cashback earned on the purchase.
Cost avoidance
How to avoid hidden costs
To avoid hidden costs on lifetime free credit cards, read the MITC and schedule of charges before activating the card. Confirm if "lifetime free" applies to both primary and add-on cards. Check rules for fuel, railway, wallet load, and rent payments as well as any service charges for reward redemptions or point transfers. Avoid cash withdrawals on credit cards where interest often starts immediately.
More strategies
Additional tips to avoid hidden costs
Enable payment reminders and autopay for the full amount due. When traveling abroad, choose to pay in local currency instead of "pay in your home currency" to avoid DCC charges. Be wary of processing fees on EMI conversions or convenience fees charged by merchants. Review statements monthly and dispute any unfamiliar charges within the specified timeline.
Pre-application guide
A checklist before applying for a card
Before applying for a lifetime free credit card, consider the following: Is the assigned limit enough for your monthly spending pattern, and what are the forex markup and any caps or offers that may reduce it. Understand the value per point and any charges involved in rewards/redemptions. Check if there are costs for add-ons/replacements or conditions to keep it free like minimum spends/periodic usage.