Month: May 2020

A practical guide for using credit cards

by Louise Clayton
Each card has a so-called interest-free period, we also often call the grace period from English. Depending on the bank and card, it lasts from 51 to about 60 days, but unfortunately, this does not mean that the customer always has so many days to settle the debt on the credit card without accruing interest. In the case of credit cards, we have a monthly billing period. Let's assume that the billing day falls on the 30th of each month. The first day of the month begins the grace period, lasting for example 55 days. On October 1, the bank will count all transactions made in September.

Pay off all this liability without accruing interest by the bank

money The customer will have until October 25 to pay off all this liability without accruing interest by the bank. Then the 55 days expire, i.e. the settlement period for the September transaction. In other words - it does not matter if the customer paid by credit card for a computer 2 thousand. USD, e.g. on September 4 or September 26, and he must transfer the entire amount back to the card's account by October 25, if he does not want to pay interest. So it is worth spending with a credit card at the beginning of the billing period, rather than at the end (i.e. in our case, e.g. October 2, not September 26) - then you get almost a month to repay.

Will the bank remind you when we have a deadline?

cash You must remember about paying off your credit card debt. It happens that Poles "spoiled" by the fact that, among others, debit on the personal account is automatically covered from the receipt of the invoice, similar thinking applies to credit cards. This is a mistake. A credit card is completely different; you often have to remember about the end of the interest-free period and transfer funds to her account to repay the debt. Every day of delay can be expensive.

What happens after exceeding the interest-free period?

The end of the interest-free period is not the final date for the repayment of credit card debt. But after the grace period, interest is charged on the debt, which on average in banks is about 20 percent. per year. Every month, depending on the bank, you should pay back at least 5 percent. debt. Otherwise, the bank may charge the customer with reminders reminding them of outstanding debt. The cost of such a letter notification is around USD 20.

When does the bank skip the interest-free period?

Sometimes Poles withdraw money from an ATM by credit card. They think that the formula is the same as for a personal account card - that it costs them nothing. Nothing could be more wrong. First of all - banks charge large commissions for cash transactions with a credit card. Secondly, such interest-free transactions do not cover such transactions. Interest is charged on the credit card account from day one. If this is not necessary, you should usually not also make transfers from a credit card. It is theoretically possible, in practice you should expect at least a few USD commission for such an operation. What's more, unfortunately, some banks and such a money transfer treat it as a cash operation. Reasonable use of a credit card can be really profitable, but if you do not remain moderate and start using the card unreasonably, then you may be disappointed - debt in a credit card can really cost us a lot ...