Dormant credit card? What it is and why your bank may be charging you for this

Credit card is one such financial tool which enables one to make easy and hassle-free transactions, whether it is payment of bills or leisurely purchases. However, there are certain terms and conditions that come packaged with the credit card, that one should be aware of. One of them is the inactivity of one's credit card. If you are a credit card holder and have been having your card lying dormant for quite some time, then chances are that your issuer, in many cases the bank, will charge you.  

Since most banks are the issuer of the credit card to their customers, they levy a certain amount that is known as its maintenance charges. These charges are nothing but service charges that the bank pulls out of the customer in lieu of the credit card services. Compared to debit card charges, the credit card charges that one needs to pay at the end of a fiscal year is higher. For example, wherein the largest public sector bank, the State Bank of India charges Rs 100 to Rs  300, subject to the type of debit card, it levies a whopping Rs 499 to Rs 4,999 in case of various credit card maintenance charges.

Meanwhile a private bank such as the HDFC Bank, it charges a minimal amount of Rs 150 to Rs 750, depending on the variant of debit card, whereas charges between Rs 500 to Rs 10,000 for annual maintenance of various credit cards. 

In the case of ICICI Bank, one needs to pay Rs 250 as annual maintenance for their debit cards. In case of credit cards with ICICI Bank, one is charges between Rs 499 to Rs 6,500 as annual maintenance, depending on the type of card

Moreover, if you have a savings account and credit card from the same bank, the bank is bound to deduct the amount from your savings account.

So, if you are a credit card holder, many banks will offer a waiver in the first year of the card issuer. You can escape from annual maintenance charges depending on the card that you have issued and the offers and benefits that come with it. If the benefits and offers are more, then chances are the annual fees are not taken into consideration. Inactivity of your credit card also has a negative impact on your overall credit score as well as is a potential open invite to frauds and illegal transactions. 

(By Ruchika Goswamy)