Features of credit cards. What is the grace period and how to learn how to use it properly?

The number of all kinds of cards in the pockets of our citizens is steadily increasing, as cash lending is already much less popular than before. Many borrowers managed to make sure that, despite the bank's advertising assurances, this credit product is quite expensive.

Credit cards have become much more popular now, however, the financial literacy of most Russians is still very low. Even with "plastic", many borrowers do not know what the grace period is and how to use it correctly.

Features of different cards

Mixing the concept of "plastic" and "credit" card, some do not distinguish these sometimes different banking products. Meanwhile, not every "plastic" is a credit card.

In fact, any card is just an instrument of access to a bank account. On the type of account the card is tied to, it will depend on whether it becomes a settlement or a credit card.

A debit (settlement) card simply allows you to pay for goods within the balance of the owner's own funds. The credit card allows its owner to gain access not only to personal money, but also to the loan that the bank provides to the borrower.

Concept of the grace period

Any loan is issued on the principle of urgency and pay, so the use of money is always charged a certain fee, calculated as a percentage. It is credit cards with a grace period that can minimize or completely avoid it.

Having decided to use such a card, each borrower must study the rules of using it to extract the maximum benefit from the financial instrument available to him. Features of the mechanism of the benefits are detailed in the banking contract. After studying its points, you can understand what the grace period is.

In fact, it represents a certain time period, during which the preferential credit regime operates, namely: you can use borrowed funds without payment or pay for them at a reduced rate. The main condition here is the fact of full repayment of the debt before the end of the validity period of this period.

Advantages of concessional lending

Loans with a grace period are very convenient, for example, in cases of wage delays or irregular income receipt. However, it is necessary to approach their choice and registration very carefully, since there is a risk that you will not be able to keep within the privileged days you have allocated.

If you do not fully pay before the end of the grace period, you will have to part with the interest that will be charged on the amount of borrowed funds. In this case, the total cost of borrowing may unpleasantly surprise an unsophisticated borrower. Therefore, it is worthwhile to carefully study the value of interest rates, as well as the specifics of calculating the grace period, before signing on the loan agreement.

Calculation features

The grace period of borrowing can be the same for renewable or overdraft credit cards. To understand what a grace period is, in each particular case, is quite difficult. After all, the programs of different credit organizations differ both in the methods of calculating it and in the number of transactions that are important for its flow. In addition, the duration of the grace period is not strictly fixed. In different banks, it varies from 1 to 2 months. Most often an interval of 50-55 days is applied.

Nuances of using cards with a grace period

Collecting information about what a grace period, pay attention to several of its most important features. First of all, it usually applies only to non-cash transactions, in particular, payment through a card of goods or services in trade and service enterprises.

If you issue a card with a grace period, you can start using it immediately, but you must remember that the first operation that you performed means the opening of a grace period for it. Many at the same time forget that withdrawing cash in an ATM is also a bank transaction, and it is not preferential.

Types of grace periods

The question of when the first grace period begins is quite complex for understanding. To answer it, you need to learn the procedure for calculating the terms of interest-free lending, which banks use. Despite all the diversity of loan programs for card products, there are 2 main types of grace periods:

• For each transaction made (credit tranche). It implies that within a specified period (grace period) after the transaction, no interest is accrued. They will be charged and written off by the bank only after the repayment of the resulting debt.
• On the totality of transactions made in the reporting period. Then for a full-fledged use of the grace period you will have to fully pay off the debt until the day that marks the end of the period. Grace period becomes a floating value, the maximum for the operations performed in its beginning, and the minimum - for the last postings.

In fact, a card with a grace period is a very convenient and "advanced" financial product, allowing, with a competent approach, to borrow money from banks on very advantageous principles. The only necessary condition for preferential lending is the absolute financial discipline of borrowers. You should clearly understand all the features of the chosen option of borrowing, carefully monitor all expenses and scrupulously keep records of both written off and credited funds to the card.