An Annual Maintenance Charge (AMC) is a fee charged by credit card issuers to cover the cost of managing and maintaining your credit card account. This charge is usually levied annually and varies depending on the card type and benefits offered. AMCs help credit card providers offer exclusive perks, such as reward points, cashback, airport lounge access, and more. Understanding AMC is crucial as it directly impacts your card's overall cost. While many premium cards have higher AMCs due to the enhanced services they provide, basic cards tend to have lower or even zero AMCs. By knowing how AMCs work, you can better manage your credit card expenses and explore ways to avoid or reduce these fees. In this article, we will discuss what AMC charges are, why they exist, how they are calculated, and tips on minimising them using platforms like the Bajaj Finserv self-service portal.
What are AMC charges in credit cards?
AMC charges, or Annual Maintenance Charges, are yearly fees levied by credit card issuers for the services and benefits provided to cardholders. These charges cover the cost of account management, customer support, and access to various features like reward points, cashback offers, and discounts. The AMC depends on the type of credit card you own – basic, premium, or co-branded cards.
For example, premium cards with features like airport lounge access, travel insurance, and exclusive rewards generally have a higher AMC. Basic or entry-level cards might have a nominal AMC or sometimes even offer zero AMC as a promotional benefit. Some credit cards also waive the AMC if certain spending thresholds are met within a year. By understanding AMC charges, you can make informed decisions about which credit card best suits your needs and how to maximise its benefits while managing costs effectively.
Why do credit cards have an annual maintenance charge?
Credit cards have an Annual Maintenance Charge (AMC) because it helps issuers cover the cost of providing and maintaining various services. Here’s why AMCs are commonly included:
- Account Management: AMCs cover administrative expenses related to managing your credit card account, including customer support, fraud monitoring, and transaction processing.
- Access to Benefits: The AMC funds the exclusive benefits offered, such as cashback, reward points, discounts, airport lounge access, and travel insurance.
- Technology and Security: Maintaining a secure payment platform with advanced technology requires ongoing investments, and the AMC helps fund these essential updates.
- Credit Facilities: Issuers provide a revolving credit facility through credit cards, which involves risk management and operational costs.
- Promotional Offers: AMC also supports special promotions, cashback offers, and partner deals that enhance the cardholder's experience.
While some cards waive the AMC for the first year or offer discounts if certain spending criteria are met, most cards maintain this charge to provide a wide range of benefits and services.
How is AMC calculated on credit cards?
The AMC on credit cards is typically a fixed yearly fee set by the card issuer, depending on the type of card and its associated benefits. For example, basic credit cards usually have a lower AMC, sometimes ranging between Rs. 500 to Rs. 1,000, while premium cards can charge upwards of Rs. 5,000 annually. Some credit cards offer an annual fee waiver if cardholders spend a certain amount within a billing year.
Additionally, certain banks may provide pro-rata AMCs for new cardholders, charging only for the months the card is active. To keep track of your card's AMC and other fees, you can use the Bajaj Finserv self-help portal for quick account access.
How to avoid or reduce AMC on your credit card?
- Choose a zero AMC card: Opt for cards with no annual maintenance charges.
- Meet spending criteria: Some cards waive AMCs if you spend a specific amount annually.
- Use promotional offers: Apply for cards that waive the first-year AMC as a promotional benefit.
- Contact customer support: Request AMC waivers through the Bajaj Finserv self-help portal
- Pay EMIs through credit cards: Learn how to pay loan EMI from a credit card to earn rewards that offset AMC costs.
Conclusion
Annual Maintenance Charges (AMCs) are an essential aspect of credit card management. Understanding how these charges work, why they exist, and how to calculate them can help you make informed choices about your card usage. By exploring ways to reduce or avoid AMCs, such as meeting spending thresholds or using the Bajaj Finserv self-help portal you can effectively manage your card expenses while maximising its benefits.
