A credit card is the easiest way to borrow from a bank. With its help, you can pay on credit anything, even utilities, even products in the supermarket.
The bank reserves for each credit card a certain amount, which the client disposes of at its discretion. The amount that can be borrowed from a bank is called the credit limit.
If you repay the debt on time, you will not have to pay interest on the loan. The bank gives the client a so-called grace period. This is the period of time during which the bank charges symbolic interest on the loan. Most often it is 0.01% per annum, sometimes less. Every bank has the best credit cards, read below how to choose the best credit card.
What Credit Limit Will be Given?
The Bank determines the amount of the credit limit for each client separately. A “person from the street” or a client who has just started to be served in the bank may be denied the opportunity to open even the smallest credit limit.
The size of the credit limit can be found only in the branch, after all the documents. The call center operator will not name the exact amount. The limit depends on the financial situation and reliability of the client.
Banks love familiar customers. If you receive a salary on a bank card or open a deposit in it, it is easier to get a credit limit. Banks themselves often open a credit limit to “salary” clients. But even in this case, you do not need to count on generosity, the limit of more than 3-4 monthly salaries – is a rarity.
Don’t worry about a small credit limit. The bank can increase it in a month, quarter, or year. If during this time you make sure that you actively use the card and carefully repay the debt without leading to penalties.
Just in case, ask for a limit with a small margin. Most likely, the bank will give less.
Do not overestimate your strengths, it is important to understand why you are going to repay the debt. A reasonable amount of credit limit is equal to your average monthly expenses. Definitely no more than a monthly income. If for some reason your monthly income is less than the credit limit set by the bank, try not to spend more than you earn. So you can get into debt for a long time.
Credit or Debit Card?
Maybe do not be fooled and use a debit card? You can get into debt with a credit card, but not with a debit card. It sounds logical, but using a credit card wisely is more comfortable and profitable.
A credit card will help you earn more on the balance. The debit balance on which interest is accrued decreases with each transaction. If you use a credit limit, interest is accrued on the full amount for a full month. 30-60% per annum on average monthly expenses – a very real return, taking into account cashback and deposit income.
It is more comfortable to rent a car with a credit card. The rental company will block the insurance deposit in case of a fine for breaking or damaging the car. The amount depends on the country and the car, usually 500-1000 euros. Your money will be blocked on the debit card, and the bank’s money will be blocked on the credit card. Under international payment systems, money must be unlocked within a month. That is, while the grace period is valid. In the case of a credit client, the size of the available limit will simply decrease.
Card or Credit?
If the circumstances are such that a relatively large amount is urgently needed, then look for a bank that will issue a cash loan. A credit card is more profitable if you use it as a payment card. Some banks issue credit cards from which you can withdraw cash. Here are the basic differences between a card and a cash loan.
Interest on the Loan
Force majeure occurred, you did not repay the entire amount of debt before the end of the grace period. Nothing bad happened, the bank will take interest in the loan. This is usually called a commission and looks not scary: 3-5% of the loan amount. It all depends on the terms of service of the card.
The real rate on card loans of most banks is not less than 50% per annum. This is a good guide for checking bank advertising. Check with the bank the total cost of the loan. Banks are required to publish this information on their websites, but they often do so in a way that is difficult for even bank clerks to understand.
The low-interest rate on the loan suggests that you need to ask the manager about the terms of service of the card. The bank is likely to compensate for the low rate with a high cost of issuing and servicing the card, or additional fees. Some banks set monthly fees in addition to the interest rate – a percentage of the outstanding balance at the end of the settlement period (usually 3-4%). The interest rate may look attractive, but only if you do not take into account the additional commission.
In addition to the interest on the loan and the fee for servicing the credit limit, many banks also charge a fee for various credit card transactions, which is fixed or measured as a percentage of the payment amount. For example, most banks charge a fee for cash withdrawals at ATMs. Moreover, even in its own ATM network, the tariff for such an operation is usually about 4%. Most banks equate transfer to another card with a cash withdrawal.
The convenience of replenishment is a critical condition for choosing a credit card. It would seem that there are many methods of replenishing the card. Cash desk or terminal, internet banking, Ukrposhta, web services. In fact, everything is more complicated than you want. The difference between these methods of replenishment is not only in the commissions. It is very important to understand the rules of payment processing in the bank, the debt to which you want to repay.
You can top up the card as you wish, the main thing is to understand how much time it will take to process the payment. If you make a mistake, you may run into penalties. Find out in the bank all the conditions for replenishing the card. Pay the most attention to the way you plan to use it.
Here’s What to Choose From
- bank cashier;
- your bank’s terminal;
- someone else’s bank terminal;
- non-banking terminal;
- the company with which the bank cooperates;
- transfer from your card in the same bank;
- transfer from your card to another bank
Of course, you first need to choose a bank and then a credit card. Each bank has its own tariffs for card service, transfers, etc. You need to make sure of the reliability of the bank and then choose credit card services.
You also need to consult with a bank employee and ask the following questions:
What conditions does the bank offer for your daily operations?
Are there cashback or bonus programs? What are the conditions?
Are there commissions on the transactions you perform most often? What are their size and accrual terms? Is it possible not to pay commissions? If so, how?
Then choose your rate and enjoy your credit card.