Father
Professional
- Messages
- 2,602
- Reaction score
- 783
- Points
- 113
A credit card provides access not to your money, but to the bank's money. Using a credit card, you can borrow money from the bank and then return it. Sounds attractive, but you need to be careful when choosing a credit card. What to look for when choosing a credit card?
The first question to ask yourself is: Do you really need a credit card? This is a convenient payment instrument, but it requires self-discipline, organization, ability to count, as well as regular income in order to repay the loan on time. After all, if you delay payments, you will have to return the bank much more than you took.
It may be more profitable to save up for the desired item, as well as to save money so that in case of unforeseen expenses you have a supply - then you do not need to borrow from the bank.
How to use a credit card without overpayments?
If you, after weighing everything, decided that you need a credit card, study the offers of different banks. Compare the terms, paying particular attention to the following:
Credit limit
The amount that the bank is ready to lend you is limited - each bank determines the limit based on the client's solvency. If you are already a client of the bank (you have an account where money is regularly received, or a deposit), the limit will probably be higher than in a new bank for you. The credit limit can be increased if you regularly spend money from your credit card and return it carefully.
Grace period
Almost all credit cards have a so-called grace period - a period during which interest for the use of funds is not charged. And if you borrow money from the bank and return it within the period specified in the contract, you will not have to pay too much. Typically, the grace period is 30-60 days and includes:
Credit card charges
In addition to the money that you actually borrow from the bank and which you have to return, a credit card may involve other costs:
Compare all conditions together. For example, a bank can compensate for a low annual service fee with a high interest rate for using a loan.
Check if the bank is trying to impose on you additional services that you do not need (for example, insurance or remote services), but for which you will have to pay. Check if such services are required and how much they cost.
It is also worth checking the amount of annual service - many banks do not charge an annual service in the first year, but they may charge for the following. Please note: the term “annual service” does not necessarily mean that you pay for using the card only once a year - for example, 1/12 of the amount for the annual service may be debited from you once a month.
Almost all banks charge a fee for withdrawing cash from a credit card. Please note: the commission can be in the form of a percentage of the withdrawal amount or in the form of a certain amount.
For example, the percentage for withdrawing cash on your credit card is 4%, but not less than $ 5.
If you withdraw $ 5, then the commission will not be 4% of the 300 rubles you withdraw (5 ÷ 100 × 4 = 5, that is, $ 0.2), but the same $ 5, all 100% of the amount.
If you withdraw 100, then you will also pay $ 5 - just the prescribed 4% of the amount (100 ÷ 100 × 4 = 4).
Well, any amount more than 100 will cost you 4% of the commission (for example, from 150 - $ 5, from 300 - $ 10).
The commission can also be charged for money transfers from a credit card to another card or a current bank account. Therefore, the most economical way to use a credit card is to pay with it for purchases and services in retail and online stores.
Find out what will happen if you cannot comply with the payment schedule, what fines and penalties you face under the terms of the agreement. Please note: even if the contract does not indicate specific amounts of forfeit, including for late payments or non-repayment of the loan, you can still collect them in court. Both unpaid amounts and a forfeit - in the amount of the refinancing rate of the Bank.
Bonuses and loyalty programs
For users of credit cards, like debit cards, loyalty programs can be provided. A loyalty program is a way to get back some of the money spent. Therefore, when choosing a card, study the bonus programs offered by the bank and evaluate whether this offer is useful to you or not. For example, if you do not have a car, you are unlikely to need a discount on gas station services. But if you fly often, bonus miles will come in handy.
Rules for the smart choice and use of a credit card:
The first question to ask yourself is: Do you really need a credit card? This is a convenient payment instrument, but it requires self-discipline, organization, ability to count, as well as regular income in order to repay the loan on time. After all, if you delay payments, you will have to return the bank much more than you took.
It may be more profitable to save up for the desired item, as well as to save money so that in case of unforeseen expenses you have a supply - then you do not need to borrow from the bank.
How to use a credit card without overpayments?
If you, after weighing everything, decided that you need a credit card, study the offers of different banks. Compare the terms, paying particular attention to the following:
- Credit limit.
- Grace period.
- Card usage costs.
- Loyalty programs, the ability to accumulate bonuses.
Credit limit
The amount that the bank is ready to lend you is limited - each bank determines the limit based on the client's solvency. If you are already a client of the bank (you have an account where money is regularly received, or a deposit), the limit will probably be higher than in a new bank for you. The credit limit can be increased if you regularly spend money from your credit card and return it carefully.
Grace period
Almost all credit cards have a so-called grace period - a period during which interest for the use of funds is not charged. And if you borrow money from the bank and return it within the period specified in the contract, you will not have to pay too much. Typically, the grace period is 30-60 days and includes:
- the time during which you shop (usually a month);
- the time during which you must return the money.
Credit card charges
In addition to the money that you actually borrow from the bank and which you have to return, a credit card may involve other costs:
- interest for using a loan;
- annual service fee;
- commission for transfers, cash withdrawals from a bank ATM.
Compare all conditions together. For example, a bank can compensate for a low annual service fee with a high interest rate for using a loan.
Check if the bank is trying to impose on you additional services that you do not need (for example, insurance or remote services), but for which you will have to pay. Check if such services are required and how much they cost.
It is also worth checking the amount of annual service - many banks do not charge an annual service in the first year, but they may charge for the following. Please note: the term “annual service” does not necessarily mean that you pay for using the card only once a year - for example, 1/12 of the amount for the annual service may be debited from you once a month.
Almost all banks charge a fee for withdrawing cash from a credit card. Please note: the commission can be in the form of a percentage of the withdrawal amount or in the form of a certain amount.
For example, the percentage for withdrawing cash on your credit card is 4%, but not less than $ 5.
If you withdraw $ 5, then the commission will not be 4% of the 300 rubles you withdraw (5 ÷ 100 × 4 = 5, that is, $ 0.2), but the same $ 5, all 100% of the amount.
If you withdraw 100, then you will also pay $ 5 - just the prescribed 4% of the amount (100 ÷ 100 × 4 = 4).
Well, any amount more than 100 will cost you 4% of the commission (for example, from 150 - $ 5, from 300 - $ 10).
The commission can also be charged for money transfers from a credit card to another card or a current bank account. Therefore, the most economical way to use a credit card is to pay with it for purchases and services in retail and online stores.
Find out what will happen if you cannot comply with the payment schedule, what fines and penalties you face under the terms of the agreement. Please note: even if the contract does not indicate specific amounts of forfeit, including for late payments or non-repayment of the loan, you can still collect them in court. Both unpaid amounts and a forfeit - in the amount of the refinancing rate of the Bank.
Bonuses and loyalty programs
For users of credit cards, like debit cards, loyalty programs can be provided. A loyalty program is a way to get back some of the money spent. Therefore, when choosing a card, study the bonus programs offered by the bank and evaluate whether this offer is useful to you or not. For example, if you do not have a car, you are unlikely to need a discount on gas station services. But if you fly often, bonus miles will come in handy.
Rules for the smart choice and use of a credit card:
- Carefully read the agreement, all attachments to it and compare the offers and conditions of different banks.
- Pay off the debt on time, if possible, without going beyond the grace period.
- Pay with your card, try not to withdraw cash from an ATM.
- Choose loyalty programs that are interesting for you, accumulate bonuses.
- And remember that the loan will have to be repaid in any case, even if the bank's license is revoked.
