Many people are still afraid to use credit cards, since in case of delay, they have to pay high interest. But, if you have basic knowledge of financial literacy and self-discipline, then a credit card can be a very handy tool.
Most banks now issue credit cards. The bottom line is the same for all: the bank gives you the opportunity to use its funds without interest within the established limit, if you return the money to the card on time. Typically, the interest-free period is 40 to 55 days, depending on the bank. The most convenient way is to install an application or a client bank, where the amount of debt and the date of payment will be visible. The bank also charges a fee for servicing the card, specify this amount in advance. It can be filmed either every month or once a year.
A spending limit is set for the card. The bank analyzes the client's data and his solvency, and determines the size of the limit. If the client clears payments on time and actively uses the card, then the limit will be increased over time.
It is very convenient to set a reminder on your phone every month so as not to miss a payment.
It is important to remember that you should pay for purchases in shops or online stores with a credit card, and not withdraw cash from an ATM or transfer to other cards and accounts! Because of this mistake, many people fall for high interest rates and spread the information that all credit cards are fraudulent. A credit card is not an interest-free cash loan. And, of course, it is contraindicated for people who cannot control their spending and live beyond their means.
In what situations can a credit card be very useful
1. If you need cash, then just pay for all your daily expenses with a credit card (groceries, basic purchases, procedures in a beauty salon, gasoline at a gas station, utility payments), and cash, or funds on a debit card, will remain in your hands. It’s much better than borrowing from friends “to paycheck”.
2. If you need to buy something large, for example, household appliances or a voucher at a good price, but the money will be available only in a month - it's time to use a credit card. Again, you don't have to take out a consumer loan and pay interest on it.
3. For unexpected expenses. For example, on a trip. In case the flight is suddenly canceled or money is stolen, or you need to urgently return earlier. In order not to wait for a transfer to the card and not to urgently look for money, it is very convenient to use a credit card, and upon arrival at home, you will have to solve the problem.
4. To accumulate cashback. There is such a scheme: you issue a debit card with an interest on the balance and a credit card with bonuses for purchases. It can be a mile program or you can pay with bonuses, for example, in cafes and restaurants. Thus, while you spend money from a credit card, this amount accumulates interest on the debit and at the same time bonuses on the credit.
Thus, if you use a credit card correctly, you can do it not just without paying interest, but also with additional benefit for yourself.
