Credit card Uses And Their Additional Card Options
A credit card is a payment card with which the amount to be paid does not depend on the cardholder’s account balance. But this amount is deducted from the cardholder’s free credit limit. In other words, a credit cards allows you to use a loan granted by a bank or other financial institution within the agreed limit. Generally, the size of the agreed limit, i.e., the credit limit, depends on the person’s regular net income. The credit limit agrees upon when concluding the credit card agreement. The requirement for the existence and amount of income and the credit limit offered accordingly vary from bank to bank and financial institution to institution and from card to card.
In particular, the credit card intend to pay for purchases, whether in stores, service institutions, or online stores. Payment for credit card transactions shall make on the date and in the manner specified by the financial institution. Repayment methods may vary. It is also reasonable to eliminate cash from an ATM with a credit card. But it is worth noting that the bank usually charges a service fee for withdrawing cash.
When a person travels a lot, he could have a credit card as a means of payment abroad, often preferred debit your credit card, and shows the credit financial institution by the confidence of the customer and thereby increases the merchants’ confidence befits so well guarantee bookings.
The card may only be used by the person in whose name the card is issued. From time to time, it’s a good idea to monitor your account status and check your credit card statement. This helps you detect potential fraud faster.
Additional credit card options
The credit card may offer additional services, such as free or discounted travel insurance, car insurance, purchase insurance, discounts for concluding other agreements in the same bank, and discounts in various service institutions. The availability of additional services should not be decisive when choosing a card. Firstly, it is worth assessing whether one or another additional service is needed at all. Secondly, if you buy this service separately, would the price be lower, and the service meet more wishes?
It is usually possible to issue an additional card (s) to the credit card. This means that it is possible to make an additional card for your family member. For example, so that they can also use the credit limit given to you. It is worth noting that the cardholder is also responsible for the transactions of the additional cardholder. Learn more about drawing ideas.
Comparison before selection
When deciding in favor of a credit card. It is worth comparing the cards offered by different banks and financial institutions. Their terms of use and the possibilities offered for use. Important terms of use that should be considered are the terms of repayment of used credit. The principles of interest and default interest calculation.
NB! Before concluding a credit card agreement, the bank or other financial institution must provide the person with sufficient explanations to assess whether the agreement offered to them meets their needs and financial possibilities. To this end, a standard consumer credit information sheet is used, which is the same in all banks and other financial institutions, making it easier for consumers to compare different offers. The information sheet shall indicate the amount of credit offered to the customer, the annual interest rate, the credit cost rate, other additional fees, default interest, and other fees related to the debt, the duration of the agreement, etc.
What do you need a credit card for?
If you are planning to start applying for a credit card, it will help you choose between cards with different conditions and answer the question: why do you need it? For making a few bigger purchases when you are short of money or need it mainly for trips abroad?
If you need a card mainly for booking hotel and airline tickets abroad, and the credit offered is not a priority. You can choose a card with a free monthly payment, for example, on which you can deposit the money yourself. This way, there is no cost to you in using the card because you are using your money.
Types of credit cards
Credit cards can divide into three groups – Charge, revolving, and fixed-payment credit cards. It is worth noting that although they often bear the same name in different banks, their terms depend on the specific bank or financial institution and the card.
- Fixed repayment credit card
You can generally use interest-free money during the agreed days. The number of interest-free days depends on the bank or financial institution and the specific credit card and can be, for example, 40-50 days. Any amounts spent in the previous month will deduct from your account by the bank or other financial institution on the agreed payment date. If the required amount is not in the account, interest will be charged. The repayment date is a specific date, such as the 10th or 20th day of each subsequent month. Usually, there is a monthly or yearly fee for the card.
- Free repayment credit card
When repaying the amount spent, you can usually choose the repayment time and amount yourself, and you can also pay in installments. As a rule, interest-free is, for example, 30-55 days, depending on the bank and card. If the money used has not been return within this time. You will have to pay interest on the amount used by the bank or financial institution. Generally, there is a monthly or annual fee for the card.
- Fixed payment credit cards
You repay the used amount to the bank in fixed and regular installments, and you can spread the installments over a longer period. Although the contract stipulates a minimum installment amount, you can also pay more. Because the sooner a bank or financial institution gets back the amount borrowed. The less you have to pay interest. As a rule, there are no interest-free days, so if you use the card to pay and the information about the transaction reaches the bank or financial institution, interest calculation will start on the amount used. It is also possible to find monthly and annual free cards among fixed-payment credit cards.
There are also credit cards where you can pay extra money to increase the free balance of the card. Of course, you do not have to pay interest to the bank for using your own money.
If you previously have a credit card, it’s a good idea to look at your transaction statement and card terms and conditions to refresh your memory to see if this is the most useful solution or if your consumption needs have changed in the meantime.
How to use a credit card wisely?
- When producing buying with a credit card. You must regularly monitor using an Internet bank statement not to gain momentum with spending. An attempt could make not to use the maximum limit. So that there are no difficulties in repaying it next month.
- Although the free repayment card allows you to choose the amount and time of the amount to be repay. You could try to repay the money used or at least most of it during the interest-free days. That way, you pay less interest. For the same reason, it is also worth paying back. The entire amount used as soon as possible in a fixed-payment card. Because there are usually no interest-free days for a fixed-payment card. If you do not need or are incapable of maintaining discipline when borrowing. A credit card with a fixed repayment may be suitable. As the bank will deduct the amount borrowed from the previous month on the due date.
- Now If the repayment of the used credit delayed, the bank or financial institution will charge interest.
- If having a credit card becomes excessive. A budget could draw up. It should record your monthly income and expenses and calculate how quickly your credit card debt can repay. Make a repayment schedule and follow it!
- If you have difficulty repaying, you should contact your bank or financial institution to find a solution.