Now banks are actively promoting credit cards, trying to offer clients the most attractive conditions against the background of competitors. If earlier such plastic was considered a sign of wealth and high social status, now almost everyone has a credit card. A wide variety of proposals for issuing credit cards is due to the massive demand among bank customers. Let’s consider why credit cards are considered so popular, and whether their registration is really beneficial.
What is a credit card?
In the classical sense, a credit card is considered to be plastic, on the balance of which there is a certain amount limit for withdrawing funds. However, the money on such a card does not belong to its owner, but to the bank that opened the account for the client. The used funds must be returned to the account in accordance with the prescribed conditions.
Now banks have significantly expanded the number of services available to credit card holders. As a rule, accounts linked to cards provide for the possibility of storing their own funds. If there is not enough personal money on the balance sheet, the client has the opportunity to use the credit limit set by the bank. Also, often, credit card holders get the opportunity to easily arrange installments when purchasing goods and use the bonus programs of banks.
The conditions for using credit money in different banks differ. Most often, the client gets the opportunity to borrow up to 1 million rubles. The limit directly depends on the solvency and the bank’s assessment of the client’s good faith.
Rates can be up to 40% per annum. Most often, they are several percent higher than the amount of overpayment for targeted lending programs. Nevertheless, such conditions are much more loyal than when obtaining a loan from an MFI. The deadline for payment most often corresponds to the card’s expiration date. The minimum monthly installment rarely exceeds 5% of the debt. Moreover, all programs provide for a grace period, within which interest is not accrued.
Benefits of Credit Cards
Credit card holders get the opportunity to enjoy the following benefits:
access to personal and credit money from one card;
the opportunity to use credit money at any time;
no overpayments for debt repayment during the grace period;
loyal interest rates;
low minimum payment and flexible debt repayment terms;
many banks offer additional services, such as buying goods in installments or access to bonus programs in partner stores when paying by card.
It is very convenient to use a credit card. The credit limit often helps when money is not enough for urgent needs, and additional services of banks help the client to save money and manage their savings easier.