We often confuse a credit card with a debit card. A credit card is more or less a revolving loan and the holder of such a card can gradually repay the loan and continue to draw money from it. On the other hand, the debit card is tied to a current or business account and its use is not associated with any other service; Credit cards were the domain of banks, but currently they are also offered by non-banking companies. Will it pay and what are the fees associated with this service?
The card will get an account that will not even a crown, but with its use you can go any time to minus and thus use the aforementioned revolving loan . And it is from these funds that the interest rate is charged. Examples include:
- ATM withdrawal
- buying goods on the Internet
- payment in store
The amount of interest is in the order of several tens of percent, which makes credit card quite expensive.
In the vast majority of cases you will be charged for maintenance of the card, which can cost tens to hundreds of crowns. The disadvantage is that you pay the fee even if you haven’t used your card at all this month. On the other hand, many banking companies will forgive you if you meet certain minimum spending requirements.
With the use of a credit card, we also have to think of a minimum payment, which can sometimes complicate our management. You may be subject to penalties or fines if there is a delay. The amount of such repayment is set as a flat rate or depends on how much money we spent that month. The minimum repayment covers interest rates .
How much do I actually pay for a credit card?
Representative example of a credit card kept at Lite Lender (21.11.2019)
Type of consumer credit: credit card credit. Total loan amount: USD 30,000. Duration of the loan: indefinitely. Interest rate: 24% per year. Monthly installment: USD 2,836. Price for management: 50 USD per month. APR is 31.30%. The total amount payable by the client is USD 34,632.
The example is based on the normally provided loan amount and the assumptions that the loan agreement will be concluded on the 11th of the month and that the loan will be immediately drawn down in full and repaid by 12 equal installments on the 5th of the month.
Benefits of using a credit card
- promotion and cashback
- interest-free period usually 55 days
- Easy payment in shops in the Czech Republic and abroad
- possibility of insurance
- installment holidays
Cons Credit Cards
- high interest rate
- card maintenance fees
- the tendency to spend more than we can afford
- short interest-free period
Pristo – a smart alternative to a credit card
Pristo is a service that will make your internet payment easier. It offers the possibility to shop in hundreds of e-shops in a single click without having to copy the data from your card. You can also pay bills and invoices much faster and easier than ever thanks to Pristo. Download is also a free app thanks to you will keep track of your expenses. Each payment can be postponed for 14 – 45 days without having to apply for a loan or use a credit card.