Everything you need to know before applying for a credit card - GovtVacancy.Net

Everything you need to know before applying for a credit card

A credit card is a payment instrument that allows you to use money from the bank under certain conditions. The cardholder must make the minimum payment on time or fully settle the debt for the grace period, if any, remembering the conditions for transferring to individual cards and withdrawing cash. But at the same time, he receives a series of advantages that no debit card can give him.

Advantages of receiving a credit card

The main advantage of a credit card is the ability to borrow funds for use:

multiple payments

You can use credit funds for any purpose including: for purchases, education, repairs, travel , treatment in a private clinic and for other purposes.

revolving card

Unlike a loan , the card is revolving and when you close the grace period, you can use the available limit again. You do not need to submit new applications for this. Upon expiration of the plastic carrier, the card is automatically reissued.

Money fund for any emergency

Loan of funds for emergency expenses. A credit card acts as a "backup wallet" that provides additional funds. When booking hotels, renting cars and in other cases where a temporary freezing of funds on the card is necessary. It is convenient to provide a credit card without depriving yourself of the possibility of managing your own money on a debit card and without handing over cash.

Free cash withdrawal

Today, credit cards are available with the ability to withdraw cash without commission and activate the loan. For this type of product, a monthly limit may be set, you should consult with the issuing bank.

 

Cons of credit cards

High interest rate

The interest rate is higher than that of a consumer loan: up to 20% or more, depending on the bank and the terms of service. However, interest is charged only on the amount owed and not on the established limit.

Mandatory minimum payment

The minimum payment is mandatory, its non-payment gives rise to the accrual of interest. Depending on the bank, the minimum payment includes 3 to 10% of the reporting period's debt and interest on the loan.

Cash withdrawal fee

Some banks charge fees for cash withdrawals. Specify the conditions: After the first cash withdrawal, the grace period can be canceled automatically.

Consequences of paying on time

Large amounts of interest may be overpaid if you don't pay a large debt before the grace period ends.

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