Choosing a credit card is not easy. The wrong choice will make a credit card a source of problems. But a correctly selected card will become an indispensable assistant. Here is what you need to know in order not to be mistaken.
Credit card is a bank payment card that allows you to manage borrowed funds within the credit limit. The credit limit, in turn, is the maximum available amount that the holder has the right to use. The most widespread in the world today are cards of Visa and MasterCard payment systems.
Bank transfer is the usual way to pay for various services. The cardholder can not only withdraw money at an ATM 24/7, but also pay it at shopping centers, online stores, restaurants, gas stations. The card limit is set by each bank individually, depending on the client’s credit history and needs. You can increase it if you do not delay payments.
Most important advantages of credit cards
- 24 hour access to funds. Regardless of the time of day, you always have available amount to make a purchase without leaving your home. There is no need to spend time standing in line at the railway ticket office or look for a terminal to pay for the online purchase of a new coat or TV – you will pay for the order online with a credit card.
- Speed of card issuance. Competing among themselves, banks are trying to attract customers by quick card issuance and a minimum package of documents. And the ability to get a credit card online saves time as much as possible on visiting a banking institution.
- The presence of a grace period of a loan. The duration of the period of free use of credit funds reaches an average of 50 to 60 days.
- Safety and comfort. The risk of meeting a fraudster lies in wait in the subway and bus, in the passage, and even in the store. The situation with a cut bag, a wallet pulled from a pocket is far from rare. In case of loss or theft of the card, it is easy to block it by calling the bank hotline. In addition, the card is protected by a pin code, which is known only to the user.
- Cost control. It is not always possible to recall where and when the cash amount was spent. By requesting a statement on the card, you can control and plan monthly expenses. The ability to instantly acquire the desired thing entails sometimes unnecessary expenses. It is worthwhile to soberly evaluate your financial realities before you make a transaction.
Less obvious reasons to choose a credit card
- Use of funds abroad. Wherever you go on a weekend, you don’t have to worry about exchanging money. In whatever country you are located, the amount of payment / cash withdrawal will be automatically converted into local currency. If you decide to rent a car abroad, they will ask your credit card to pay for the service – cash will not be accepted.
- Cashback. Actively using a credit card, part of the funds from the purchase is returned to you. For example, some banks have a cashback program for payment in various types of outlets: supermarkets, pharmacies, gas stations. Such a function will return up to 20%, but more often 1-5%. The higher the status of a bank card (Gold or Platinum), the bigger cashback you get.
- Additional privileges. To attract customers, banking organizations offer privileges, accumulative bonuses for purchases, which in the future can be settled or exchanged for prizes.
Are their cons in using credit cards?
Credit card disadvantages also require some attention. The client should at least be aware of them. This is sometimes a high percentage for the use of credit funds, and additional fees for servicing the card (SMS alerts), and fees for cash withdrawals, and penalties for late loan repayments. Remember, even insignificant arrears will entail accrual of interest. This will not only undermine your credibility with the banking institution, but also impose an obligation to pay off the debt on time. Delaying with debt repayment, you run the risk of increasing the loan amount several times.