A credit card does not provide access to your money, but to the money of the bank. Using a credit card, you can borrow money from the bank, and then return it. It sounds attractive, but you need to carefully approach the issue of choosing a credit card. What to look for when choosing a credit card? Financial portal Gidmani can help you to answer this and other financial-related questions.
Things to Keep in Mind before Getting a Card
The first question to ask yourself is: do you really need a credit card? This is a convenient payment tool, but it involves self-discipline, organization, ability to count, as well as regular income in order to repay the loan on time. After all, if you delay payments, you will have to return to the bank much more than you’ve got.
It may be more profitable to save up for the desired thing, as well as save money so that in case of unforeseen expenses you have a reserve - then you will not need to borrow from the bank. How to use a credit card without overpayments? If you, having weighed everything, decided that you need a credit card, study the offers of different banks. Compare the conditions, paying particular attention to the following:
- Credit limit.
- Grace period.
- Card usage costs.
- Loyalty programs, the ability to save bonuses.
- Credit limit
The amount that the bank is ready to lend to you is limited - each bank determines a limit based on the solvency of the client. If you are already a client of the bank (you have an account where money is regularly received, or a deposit), the limit will probably be greater than in a bank new to you. The credit limit can be increased if you regularly spend money from a credit card and carefully return them.
Grace Period
Almost all credit cards have a so-called grace period - the period during which interest on the use of funds is not charged. And if you borrow money from the bank and return it within the term established by the contract, you will not have to pay extra. Typically, the grace period is 30-60 days and includes:
- the time during which you shop (usually a month);
- the time during which you must return the money.
Some banks offer an extended grace period. However, not everything is so simple: during this period, you still have to pay off some fixed part of the debt. Or, a credit card with an extended grace period has limited functionality - you can pay it not everywhere, but only with partners of the bank.
Check Which Bonuses and Loyalty Programs the Bank Offers
For credit card users, as well as debit, loyalty programs may be provided. The loyalty program is a way to return part of the money spent. Therefore, choosing a card, study the bonus programs that the bank offers and evaluate whether this offer is useful to you or not. For example, if you do not have a car, you are unlikely to need a discount on gas station services. But if you fly often, bonus miles will come in handy.