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How to use a credit card



Credit cards are a familiar product to many, but not everyone knows exactly how to use it. Unfortunately, credit card holders are the ones who most often make mistakes out of ignorance, misunderstand the meaning of the card, and don’t know the nuances of using it. That’s why we’ll look at the most important things every borrower needs to know.

How to use a credit card, what are the important points of billing you should know. About the interest rates, cash withdrawals, service fees, the debt repayment process. And, of course, about the mistakes that borrowers most often make.

About Credit Limit and Rates

Before telling you how to use a credit card, let’s look at its main aspects – the interest rate and limit. These are the key features of the product.

The rate and limit become known to the client only after the consideration of the application. The bank indicates the minimum interest rate and credit limit in the description of the card, but in fact they are almost never assigned.

  1. Rate. If the bank writes a range, for example, 20-30%, new customers are usually assigned a rate closer to the maximum. Many banks increase the rate for cash withdrawals and transfers.
  2. Limit. If the bank says that it gives out up to 700,000, it may approve only 50,000. This is standard practice. But in the future, if the client is active and does not commit delinquency, the limit will be continuously increased.

What is important to know about the limit:

  • It’s revolving. You can make any credit and debit transactions within it;
  • It increases regularly with the active use of the card.

How to use a credit card without interest

Almost all banks include a grace period for credit cards. This option allows you to use the card without overpaying. If you pay your debt during this period, the bank charges no interest.

The standard grace period is 55 days. But many banks issue credit cards with extremely long grace periods. This period can last for 100 days, 120 days, or even 200 days. As a result, borrowers can use the line of credit for months without overpaying anything.

You can always find information about when the grace period ends and the amount you need to put in your account to fully cover the debt in banking. If you keep track of your due dates, you can use a credit card with a grace period all the time without overpaying anything.

What’s important to know:

  • Grace is renewable: one ends, another begins;
  • To be interest free, you must close your debt in full before the end of the grace period;
  • Cash withdrawals and transfers are usually not included in the grace period;
  • You can keep track of the start and end dates of the grace period in banking, and the bank will also inform you by SMS.

About service fees

Almost all credit cards have a service charge that is deducted automatically. Some banks do not charge a service fee, but those offers are rare in the market.

What’s important to know:

  • even if the client does not use the card, the fee will still be charged (unless the conditions of a particular bank suggest otherwise);
  • the fee is deducted automatically;
  • The charge-off fee may bring the account into deficit, as a result there will be a need to make another payment.

How you can use your credit card

Now let’s look at what you can do with a credit card in general, what operations are available to its holders. And there are no restrictions. You can do everything with a credit card that you can do with a debit card. It’s just that in this case you don’t use your personal funds, but borrowed ones.

How you can use your Visa and MasterCard credit cards:

  • Use them to pay for your purchases and services at all points of sale where there is a Card payment terminals;
  • Pay online at all websites and services that accept payments with the card;
  • To withdraw cash from any ATMs;
  • Make transfers to any cards, accounts, and e-wallets;
  • perform any payment operations in banking: for telephone, Internet, TV, utilities, pay fines, taxes, duties, and more.

Tips for better credit card use

Before using a credit card, it is extremely important to learn its rates and operating mechanisms. If a person is not familiar with banking products, he or she can get confused, make wrong actions and mistakes.

We’ve put together some basic guidelines to help newcomers use a credit card correctly, avoid overdue payments, and avoid overpaying large amounts:

  1. Check with the bank immediately at what point the first grace period begins to operate. Try to keep to its terms, so that the bank does not accrue interest.
  2. Do not forget about the service fee, which will be charged even if there is no minus. If you forget and the account goes into deficit, there is a risk of falling into arrears and ruining your credit history.
  3. Try to minimize cash withdrawals and transfers to cards, accounts, and wallets. They greatly increase your overpayments.
  4. Make not the minimum monthly payment specified by the bank, but a larger amount if possible. This way you reduce your overpayments.
  5. Don’t make the payment on the due date. Try to make it at least 1-2 days in advance. You may encounter an unexpected delay.
  6. If you no longer need your credit card, be sure to contact the bank and close it. Otherwise, you will constantly be paying service fees and can get into a bad situation with delinquencies.
  7. If you want to have a decent credit card limit, use it actively and without delinquencies. The bank will increase the amount regularly, every 3-6 months.