Almost every personal account holder uses the debit card issued to him. With its use, you can withdraw cash from ATMs or pay for services and purchases in both stationary and online stores.
According to the data of the National Bank of Poland, after the second quarter of 2017, there were 29.2 million items in our portfolios. Poles also use credit cards – their number after Q2 2017 was 5.9 million. Let’s take a closer look and answer the question: Is it worth having a credit card?
What is a credit card?
According to the definition on the Economic Education Portal of the National Bank of Poland, a credit card is a payment card, the issuing of which is associated with the granting of a credit limit by the card issuer, e.g. a bank. The operations carried out by the cardholder are settled within the limit granted. (…) A credit period is associated with the grace period.
This means that if the cardholder pays back 100 percent. debt is shown by the bank on the transaction statement it will not pay interest on the card loan. The grace period only applies to cashless transactions. On cash withdrawals, e.g. at ATMs, interest must be paid in each case (for each day to the day of withdrawal).
The definition of a credit card lists its two most important parameters: credit limit and interest-free period. What do you need to know about them?
The credit limit
The credit limit is the amount of funds up to which we can borrow on the credit card. The credit limit is set individually for each customer based on their income or credit history. By using a credit card (e.g. paying for purchases or services), we spend the bank’s money. Money, which of course, we must give back sooner or later.
Interest-free period and card repayment
The interest-free period is the time during which the bank does not charge interest on debt on credit card transactions. If, before its expiry, we repay all the debt that is on the transaction statement received from the bank, we will give back to the bank as much as we borrowed from it.
Depending on the bank, the interest-free period usually lasts 52-58 days and consists of a settlement period (usually monthly) plus e.g. 25 days for paying off the debt. However, it should be remembered that the interest-free period applies only to non-cash transactions.
This means that it is not profitable to withdraw money from ATMs with a credit card, for example. Cash transactions bear interest from the day of payment to the day of repayment. There is also an amount or percentage commission on the withdrawal amount. You also need to be careful when making transfers from your credit card account, because some banks treat them as cash transactions and immediately charge interest plus commission.
At the end of the settlement period, the bank sends us a summary of all transactions together with information regarding the repayment of the resulting debt. We can repay the debt in whole or in part (banks want a minimum amount – usually 5% of the debt). Unpaid debt bears interest. We can also spread unpaid debts into installments and pay them back, e.g. for 6 or 12 (or even more) months.
Is it worth it
It’s worth having a credit card, but it’s best to stick to your repayment dates well and avoid high-interest rates. It is a product for people who often lack their own funds for various reasons, e.g. in the second part of the month. In such situations, it can be treated as an interest-free loan for current expenses and there are no obstacles to use such a product.