The credit card was once a symbol of luxury. Today it is publicly available, although before you receive it, the bank will verify your credit standing and credit history. A credit card has its pros and cons, and therefore supporters and opponents. Is it worth having and how does it really work?
A credit card is a payment card that your bank will issue to you when granting a credit limit. All operations performed by you with its use will be settled within the credit limit granted.
What is the credit card?
When choosing a credit card, you will be able to use the funds up to the limit set by the bank, and not the funds accumulated on your own bank account (as in the case of a debit card).
In practice, it looks like this: when issuing a credit card, the bank will not immediately grant you the entire amount of the limit granted with the obligation to pay installments every month. If you have a credit card, you will be able to use the money up to the limit you set, according to your needs. Therefore, you will withdraw funds in the amount that you would like to use. Everything within the set limit.
If you repay the amounts due on time, you will not incur additional costs. This is the so-called interest-free period. The length of this period varies from bank to bank. Usually, it is about fifty-several days, but there are non-cash periods proposed by banks in the length of about forty or over sixty days.
It is preferred that the deadline for ending the interest-free period falls, for example, after receipt of remuneration on your account. In this case, you’ll have enough money to repay your credit card. The bank will charge interest only if you are late with the payment of the debt.
Many banks offer credit cards which, as a bonus
Give you the option of joining loyalty programs or getting discounts. For example: when you pay for the fuel at selected stations, you can receive points redeemable for rewards, or when you make purchases at selected stores, you can receive a certain percentage of your money back.
Do you know of situations in your life that your pay for work has not yet been credited to your account, and you need cash immediately and unexpectedly? Because, for example, your uninsured apartment was flooded by a neighbor or your car broke on the road? That’s when a credit card comes in handy.
It is simply a convenient and fast means of payment. You do not have to submit an application for a loan or wait for the bank to issue a loan decision. You use your credit card whenever you want, within the limit granted.
A credit card is also a convenient way to spend more, which we can’t always afford using a debit card. The fee for a flight ticket, hotel, dream trip or long-awaited concert – these are just examples of situations that may require one-time, larger expenses. In such cases, we do not have to apply for a bank loan because an easy-to-use credit card is enough.
What is the cost of the credit card?
If you decide on a credit card, check the bank’s offer first. If you do not pay your credit card debt on time, you will be charged interest. In addition, you need to know about the possibility of paying the following fees:
- fees for issuing a credit card,
- fees for issuing an additional card,
- monthly or annual fees for having a credit card,
- insurance fees (usually any),
- fees for changing the billing cycle date,
- charges for exceeding the credit card limit,
- fees for issuing a duplicate credit card,
- the fee charged in relation to taking recovery actions.
How do I pay by credit card and what transactions should I use it for?
The credit card is created for non-cash transactions. This means that you can safely pay with it at stationary and online stores (e.g. by buying an online flight ticket). You can use it just like a debit card and use it to withdraw money from an ATM. However, transactions with the use of a credit card to withdraw cash from an ATM may involve a commission and the need to pay interest.
Credit card – is it worth having it?
A credit card is a possibility of handling virtual money under the loan up to the available limit and having it can be beneficial in crisis situations. With reasonable use and payment of all amounts due it will not cause financial problems. Instead, it is a convenient option that allows for additional expenses, usually, put off until later because of insufficient funds available on the current account.
Having a credit card does not preclude the normal use of a debit card. So it’s worth having it in a situation where you need comfortable financial collateral.