Learning Financial Literacy: Credit Cards


The cardholder should personally monitor the status of the account and the actual passage of payments, as "unexpected" debts may arise for various reasons

In some cases, it is more profitable for a client to use a consumer loan - preferably in the same bank where his debit card is opened: the loan does not take much time. The bank will provide a regular customer with favorable conditions for obtaining a loan - as a rule, the interest on it will be less than the interest on the card outside the grace period.

You need to pay off your debt on time.

Money on a credit card can only be used temporarily, the client is obliged to return it. The sooner the credit card debt is paid off, the cheaper this service will be. Before you open a credit card, you need to match future loan payments with your income.

Unlike a loan, using money on a credit card can be free.

It is better to use the funds on the card during the grace period. The grace period of repayment is a certain period during which the bank makes it possible to use borrowed funds from the card for free. If during this period the cardholder fully returns the amount spent, then no interest will be accrued on it.

When concluding an agreement, you should carefully study the conditions for using the grace period: validity period (from what moment it starts, when it ends, changes or not during the validity of the agreement); list of transactions to which it applies.

In many banks, the grace period does not apply to cash withdrawals from an ATM and transfers to other accounts: such operations are regarded as a loan and interest is charged on them until the date of full repayment of the debt on the card.

Insurance should be consciously

When issuing cards, banks actively offer to use various insurance services. Insurance is an additional service provided only with the consent of the borrower; according to the law on consumer credit, it can be waived. You should not agree to it without understanding why it is needed and in what cases and in whose favor it works.

Get a card in person

The borrower must receive the card at the bank office or by mail with delivery personally or to a representative. If the card is sent by mail, it is necessary to give written consent to this when concluding the contract. The responsibility for identifying the client lies with the bank.

Make a monthly payment of at least the required amount

Monthly, it is necessary to make a mandatory (minimum) payment established by the bank (usually about 5–10% of the amount owed). Otherwise, in addition to interest on the outstanding loan amount, additional fines or penalties will be charged on the card.

If possible, you should deposit an amount in excess of the minimum payment. The larger the debt is repaid, the less interest will be charged.

You need to follow the credit limit

Choose your credit card carefully. You should familiarize yourself with best credit cards and choose the best one for yourself

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