There are several features to be considered using a credit card: the interest rate, the length of a grace period, the availability and size of commission for cashing at ATMs, service fee, and others.
The reasonable size or absence of commissions and cost of additional payments makes the credit card as profitable as possible. However, banks offer a number of extra perks that will not only help reduce maintenance costs, but also make profit.
Modern banks use a range of methods to attract new customers and to keep the loyal clients. However, for most clients, money is the key reason for sticking to a bank or leaving it and finding a new financial establishment for collaboration. Follow these tips to use the credit card to the maximum
- Pay your debt only within grace period, that is, a certain number of days in which interest is not accrued after the withdrawal of funds;
- Seek for reduction or cancellation of service fees if certain conditions are met (usually the level of the balance on the account);
- Get interest on the average monthly balance of funds;
- Use bonus miles as an opportunity to buy tickets;
- Participate in discounts and bonus programs from the partners of the bank (cafes, restaurants, shops, beauty salons, fitness clubs, etc.);
- Enjoy cashback – the partial return of the funds spent on non-cash payment for goods and services.
In addition, extra benefits can be obtained by the right choice of payment system, as well as when issuing special types of plastics instead of the standard ones.
Grace Period As A Source Of Benefit
Although the rates on credit cards are significantly higher than for ordinary consumer loans, there is one detail that makes short-term use of borrowed funds free of charge. Enterprising borrowers have invented yet another quite legal way to earn with a credit card. The essence of the scheme is as follows:
- The client withdraws the maximum possible amount from the card.
- He transfers money for a short-term deposit at interest.
- After a month passes, he closes the deposit and receives interest;
- He pays credit card debt in full.
Thus, the borrower receives a profit in the form of interest on the deposit, and the obligation to pay interest does not come. The scheme is interesting and effective, but several things should be considered:
- Is there a fee for withdrawing cash from the ATM?
- What is the real term of the grace period: banks calculate it differently, counting either from the date of withdrawal or from the first day of the month;
In the wake of the consumer boom, banks increasingly offer plastic cards with a cashback function, which provides a return of 0.5-3% of the amount paid for the purchases. Such credit cards appeared in the US back in the 1980s.
What should you look for when choosing a plastic with cashback? The first is the annual service fee. As a rule, this commission is higher than that of conventional bank cards with the same status. Another case that can deprive a client of the expected benefits is a change in terms, i.e. perks only as promo campaign. So read you card agreement before signing carefully!