Credit card – what is it? How does a credit card work?

A credit card is a very convenient credit product – regular repayments will avoid accruing interest, and the deadline by which the credit limit used should be settled is longer than a month. How do you use credit cards to get free credit?

A credit card is nothing more than a credit card payment limit that every bank customer knows. In form, it does not differ from every card it receives to service the funds accumulated on a regular bank account. Credit card while shopping but gets no funds from the personal account, and credit account.

How does a credit card work?

How does a credit card work?

The principle of a credit card is very simple. The bank will not start charging interest on the debt accrued on the card account until the user uses it or exceeds the credit card repayment date.

A specific term associated with the operation of a credit card is the interest-free period – the period during which the card issuing bank will not charge interest on the debt limit used. The interest-free period is usually 50-60 days and consists of a settlement period (30 days) and additional time to pay off the debt.

This means that when paying by card for purchases on the first day of the billing period, we have 30 days to repay this amount plus 20-30 days, which the bank has set in its offer. During this time, we have a guarantee that the bank will not start charging interest on the amount spent. This means that we can repay the debt on the card only at the end of the next month, and until then use the free loan.

Credit card repayment

Credit card repayment

Before the end of the interest-free period, however, you must repay your credit cardso that the bank does not start charging interest. In this way, using a credit card will only involve the customer paying a fee for using the card. Banks are less likely to avoid it than debit cards issued for a personal account, but there are those on the market that are free of charge. All you have to do is ensure that you get the right amount into your bank account or actively use it when shopping.

Credit card repayment is a very simple process. The issuing bank provides the credit card number, or rather the credit card account number, which is used to repay the debt. The only thing the customer has to do, in the corresponding period make a transfer of funds from the savings account to the credit card account. However, be careful if you repay your credit card on the last day of the interest-free period. The same rule applies here as in the case of a regular transfer – it may not arrive on the same day and, as a result, the bank will charge interest for each day of delay.

Credit card transfer and cash withdrawal by credit card

Credit card transfer and cash withdrawal by credit card

The credit card is primarily used for payments made in stationary or online stores. It is also possible to use it at an ATM or make a transfer from a credit card. However, banks will charge a generous fee for such non-standard operations.

While the basic use of the card is not expensive, all operations involving the conversion of the credit limit on the card account into cash are associated with additional fees. The commission for cash withdrawal by credit card can reach up to 10 percent. – the bank will charge a fee of PLN 10 for each PLN 100 paid.

The same applies to transfers from the credit card account – it is possible but equally expensive. Credit card publishers also often offer a conversion of the available credit limit into a cash loan. It should be remembered, however, that interest is accrued from the moment such contract is signed, and not as in the case of repayment of the credit card – only after the end of the interest-free period.

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