I have never owned or used a credit card before. I have only used a debit card and other non-debt/non-credit forms of payments online. I am thinking for applying for a credit card, but there are some terms or charges that I don't fully understand. There's a card (specifically, the SBI SimplyClick Credit Card for online shopping). It has an annual maintenance fee and a one-time annual fee.

Apart from this, though the official website doesn't mention this, it also has a "3.50% p.m. (42% p.a.)" finance charge. Given I only purchase one item and I happen to have the sufficient amount in my bank account, does it mean the amount will still be considered a loan and I will be paying a 3.50% interest on that at the end of the month?

Also, are there any other charges I should be aware of? I don't want to discuss the obvious stuff like reward points and annual maintenance charge. But I have no clue how a credit card works. Is every purchase a loan? Or purchases beyond a particular limit is a loan? Does a credit card work like a debit card until I don't cross my bank balance?

  • "one-time annual fee" doesn't make sense. It's either "one-time", i.e. once ever, or "annual", i.e. every year. And you should probably find a card without "one-time annual fee" and "annual maintenance fee"; there are plenty of those.
    – mustaccio
    Jan 23, 2022 at 20:08

2 Answers 2


The card has both an initial fee and an additional annual fee that may be waived.


  • Annual Fee (one time): Rs. 499
  • Renewal Fee (per annum): Rs. 499 from second year onwards. Renewal Fee reversed if annual spends for last year >= Rs.1,00,000
  • Add-on Fee (per annum): Nil

However it does potentially offer an interest free period

E. Interest Free Grace Period
The interest free credit period could range from 20 to 50 days subject to submission of claims by the merchant. However, this is not applicable if the previous month’s balance has not been cleared in full or if the Cardholder has availed of cash from any ATM.

So if you spend enough to avoid the renewal fee each year, avoid cash advances altogether and also pay off the balance each month it seems you'll only pay the initial fee to use the card and thereafter it will be free.

In other words if you buy things using the credit card and pay the credit card bill that will arrive between 20 and 50 days afterwards in full each month, you'll not pay interest on the money you've borrowed to buy those things.

These are pretty common terms for credit cards although you may well be able to find one without an initial fee or a renewal fee if you shop around.


If you use your credit card wisely, you wouldn't have to bear any charges. I had used SBI credit cards before and switched to HDFC Bank because SBI included numerous charges in my monthly bill. I've been using an HDFC Bank credit card to waive the annual fee when I make certain purchases. Avoid SBI and switch to HDFC credit cards if possible for lucrative deals. Just my views on using both their credit cards.

Here are a few tips to avoid uncertain charges ~

  1. Avoid making the minimum payment due
  2. Pre-pay the bill
  3. Pay in full
  4. Avoid cash advance
  5. Avoid using credit cards when travelling abroad

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