Credit Card – Credit Line and Repayment
Using a credit card is the bank’s money, not your own. That is, using a credit card is just like taking out a personal loan or mortgage, and it is one of the most expensive constructions. If you have a credit card in use, your credit line and repayment is the most important issue. If the loan is not repaid on time, ie within the grace period, you will be charged interest. Therefore, it is not worth using it as a supplement to your payment as you can easily become indebted. The amount of credit your bank sets when applying for a credit card depends primarily on your income. Typically, you will receive double or triple your salary. You may be asked to change this later, but your income will be checked again to see.
You can repay the higher loan safely.
It is very important that you pay off your credit card as much as possible during the grace period. This is 30-45 days, during which time you can use your bank money without interest charges. If the payment exceeds this period, the bank will charge interest on the debt, which will be paid in addition to the amount used. If you are unable to repay the full amount on time, cancel at least the minimum amount due. This pays out your monthly fees and expenses, and pays off a small amount of your debt, thus avoiding penalty fees. To avoid the high interest rates for late repayments, it’s a good idea to pay by credit card via direct debit, so that the amount used is refunded before the grace period. The credit card operation is not too complicated if you pay attention to the details.
When applying for a credit card
Be sure to pay attention to the size of the APR; it is not enough to consider interest only because it does not give you a complete picture of the cost of the loan. The APR will show you how expensive the card is, as the APR includes both the charges and the interest rate. In the current card market, you can find deals with a APR of over 30%, meaning it is not cheap credit.
Another important consideration when choosing a credit card is what discounts are added to the costs. For example, some banks release the card fee for a certain amount of spending. It is also worth calculating how much you are taking advantage of bonuses, discounts and how much money you can earn with the card. Credit cards, to make them more attractive, are focused on these discounts. You may not be able to pay back your credit card with a low spend, as the charges (account management fee, card fee, administration fee) may be higher than what you get after your purchase.
The credit is very quick
Applying for a credit card doesn’t require you to open a separate bank account, it only takes a few days to produce the card. If you handle your credit card well, you can make money with it. To do this, of course, you need to be aware, and make sure you always pay off your debt on time. Responsible financial behavior can easily do this.
What you should know about a credit card is that you should never use it for cash withdrawals, only for purchases. Cash withdrawal costs a lot more with a credit card than with a traditional bank card.