Credit card is a type of consumer lending. Knowing the basic concepts and features, it is easy and convenient to use this type of loan. There are enough banks that offer plastic cards with a credit limit on the market.
What Should You Know About Credit Cards?
The main concepts used in advertising offers of financial institutions:
· Credit limit;
· Grace period;
· Interest rate;
· Annual maintenance.
The credit limit is the amount within which it is possible to make purchases and payments. In other words, it is the amount of the loan provided by the bank. It is set individually by each credit institution.
The card limit can be changed both upward and downward. This is influenced by several factors: the solvency of the holder, the activity of use, the timely payment of payments, the availability of salary cards in this bank.
After making the first purchase, the countdown begins, during which you can return the spent amount without interest. The grace period ranges from 50 days to 12 months for different banks. No interest will be charged for using the card during this time.
Upon the expiration of the grace period, the calculation is carried out at the annual rate. In most cases, it is high compared to a simple consumer loan. The interest rate on some offers reaches 49.9% per annum.
If the funds spent were not returned in full before the expiration of the grace period, you must make a monthly payment. The amount of such payment is set by each banking organization on the basis of its credit policy.
There are banks that charge a fee for using a credit card. Annual maintenance is the annual amount that the owner pays for the ability to manage borrowed funds on the card.
Use cases.
Most of the transactions made with a credit card are non-cash payments. This is payment for different categories of goods and services in places where such an opportunity is provided. Payments in online stores are no less popular.
If necessary, cash withdrawal is possible. But there is a commission for this operation and the grace period does not apply in this case. A limit on card withdrawal can be set.
If desired, you can store your own funds on a credit card in excess of the established limit. Some financial institutions charge their clients interest in the same way as opening a term deposit.
What else should you pay attention to?
Banks use additional instruments in the fight for clients. In promotional offers you can find various bonus programs that allow you to accumulate points for making purchases. Accumulated bonuses are exchanged for discounts in participating stores.
Cards with cashback are popular. In this case, part of the money spent is returned to the account. Accrual can be in the form of money and in the form of bonuses.
A card with a revolving credit limit has a number of features, knowing which, you can choose the most suitable option for yourself.
Registration does not take much time, does not require a large number of documents. It is not necessary to personally visit the bank’s office — it is possible to submit an online application with subsequent delivery to the specified address.
When choosing, it is necessary to take into account all the parameters in the complex. It is worth paying special attention to those positions that will be associated with the way of using the card.
