Sometimes it happens that you urgently need to borrow money before your paycheck or you don’t have enough money for a big purchase. In such cases, a credit card can help! About this financial tool is perhaps the greatest number of horror stories and rumors. Together we’ll try to figure out how the credit card works and when it can be of great help.
With a credit card, you’re spending the bank’s money, not your own.
A credit card gives you access to the bank’s money, not your own. With a credit card, you can borrow money from the bank for a while and then pay it back. Not everyone understands the difference between credit cards and regular debit cards. Let’s explain in simple words: with a debit card we use our own money, but with a credit card we use the bank’s money.
A credit card is your backup wallet.
There are times when something you need that you need right now breaks down. For example, a car or a laptop computer. And you don’t have money for its repair, but you will have it in a month, let’s say. In fact, the credit card – this is your spare wallet, from which you can take as much as you need, if you need it urgently. It is also convenient to use your credit card to make purchases in stores and on the Internet. Cash can also be withdrawn from your credit card, but with a fee.
There are different credit cards, so you should choose the one that suits you. Nowadays the financial market offers a great variety of credit cards. What should you pay attention to?
- The most common payment systems you should pay attention to are VISA and MasterCard.
- The status of the card – there are classic, gold and platinum cards with different privileges and chips.
- Limits – spending limits can be very small or in the millions.
- On different programs – there are cards that add airline miles for spending or make deductions to charities when you spend on them.
You don’t have to pay any interest on your credit card.
The credit card, like a classic loan, gives you interest, but you can choose not to pay it. Often there is no commission for the annual maintenance of the credit card. If you manage to keep your payments within the interest-free period, the credit card will cost you nothing.
Grace period is very convenient and easy.
Any credit card has a grace period, or a period in which you can pay no interest to the bank. It consists of two parts – the accounting and payment periods. During the first one you can pay with your card in stores. During the second part you need to return the entire amount spent, so that the bank did not accrue interest. Remember that the grace period is valid only for cashless purchases! It does not apply to transfers and cash withdrawals.
The interest-free period begins not with your next purchase, but with the date following your report. Once a month you will receive reports by email with all the information.
The credit limit can be changed.
The amount you get on your credit card is limited, each bank determines the limit based on a customer’s ability to pay individually. For bank customers who have an account with regular payments or a deposit, the credit card limit is likely to be higher than for new customers of the bank. A credit limit can be increased if you regularly spend money from your credit card and, most importantly, pay it back on time.
You can replenish your credit card by cash and noncash methods.
You can control the funds on your card in the same way as you do on your debit card. As a rule, banks have a mobile app.
With your credit card, you can pay in stores and on the Internet.
A credit card can be used to pay for purchases around the world and online. Anywhere there’s a payment terminal – just show your card to a cashier. If you pay by contactless method with your smartphone, you won’t need to enter your PIN code.
It’s also convenient to pay with a credit card in online stores. Remember that online purchases are protected if they are made at verified sites. You will receive an SMS with a code to confirm your purchase. Don’t give it to anyone, even if it came to you when you weren’t shopping.
To summarize, a credit card is a convenient payment tool that allows you to save money. But remember that it requires self-discipline, organization, counting skills, and regular income to repay the loan on time.