I randomly checked my statement today and saw some charges that I didn’t get. Can you explain what is finance charges in HDFC credit card statement?
Finance charges are nothing but an additional interest that HDFC Bank charges for not clearing dues on time. A few other causes are non-payment of dues, cash withdrawal and EMI conversion.
I think of it this way: every time you swipe your credit card, HDFC pays the merchant on your behalf. This is like a short-term loan from the bank, which remains interest-free only until the payment due date. If you don’t repay in full, finance charges begin to apply.
Suppose you pay a restaurant bill of ₹10,000 with your HDFC credit card:
- If you repay the full ₹10,000 by the due date: No finance charges.
- If you pay only ₹5,000: The remaining ₹5,000 attracts a finance charge of ~3.75% per month (up to 45% annually), which appears in your next billing cycle.
- If you pay less than the full amount, interest is charged on the unpaid balance. Paying only the minimum due will also trigger finance charges.
- An additional 2.5% interest applies if you get cash using your credit card.
- If you convert your big purchases into EMIs, you pay a monthly interest of 0.99%.
All of these charges add up and reflect as finance charges on your credit card bill.