Credit card – who is it not suitable for?
A credit card is currently a solution that more and more customers are choosing. Banks compete in advertising attractive offers. However, some are still not convinced by this form of financial support. Find out who the credit card is for and who is not.
Debit card and credit differences
We can distinguish several types of bank cards. The most popular are debit and credit cards. What is the difference between a debit and credit card ? The first of these is issued by the bank to the current account. It allows you to make non-cash transactions and withdraw money from ATMs. In the case of a debit card, we use the amount that we have on the account. We can only run debit on it. Its amount is usually small. A credit card is a completely different banking product . It is not associated with a personal account.
The loan we can use is set by an upper limit. It can be changed during the contract with the bank. They pay the bank with this type of card. He must pay back the borrowed amount within a certain period to avoid accruing interest. There is a so-called interest-free period. We lose the option to pay only when we reach the previously agreed limit. Interest is accrued when we exceed the reference period. Depending on the bank, it may be a different number of days.
Who is the credit card suitable for?
We have already explained how a credit card and a debit card differ. Some believe that this is an unnecessary product and makes it easier to enter the debt spiral. What is our opinion on this subject? The credit card in the right hands is a great convenience. It’s best for people who often travel abroad. Using it, we can easily book accommodation or rent a car. It is also a financial security in the event of investment or emergency.
If we pay the amount due in a timely manner, we will not pay any interest. It’s a tempting, but also beneficial offer. Remember not to abuse this support and set a reasonable limit. A credit card is not the right solution for people who already have debt and are in danger of being in a spiral of debt. If you use it permanently, you need to make timely repayments to avoid accruing interest that may be high.
Credit card cost
You already know what your credit card repayment looks like, but that’s not the only issue worth raising. Having a credit card often has additional costs. Here is a list of additional costs that the bank may charge:
- Fee for issuing the card (once),
- Monthly or annual fee for using the card,
- Insurance fee,
- Fee for changing the date of cyclical settlement,
- Fee for exceeding the limit on the card,
- Fee for issuing a duplicate credit card if lost.
As you can see the costs can be really big. However, banks often offer promotions, especially if we use the first credit card. Using the card regularly will definitely avoid some additional costs. Remember that withdrawing cash from a bank when using a credit card involves immediate interest accrual. A credit card may not be suitable for people who prefer to pay in cash rather than cashless transactions.
A credit card can be a good option for many of us. However, it is worth remembering to use it wisely and in moderation. When signing the contract with the bank, pay attention to the date of cyclical settlement, the limit set and additional fees for having a credit card.