The number of banks is growing every day, and they all fight for customers. Credit cards are a very convenient banking product , and bankers use various advertising and marketing mechanisms to promote them. As a rule, lenders try to increase the period of free use of finance, which is usually called the grace period. Allegedly, during this time no interest is accrued for using borrowed finance, but is it really so? After all, offers are very tempting, and in some cases, an interest-free loan period can reach 200 days. What is the catch, and is it really beneficial to the average man?
How is the grace period calculated?
The mechanism of interest-free or soft loans has been used for a long time and works as follows:
- A credit card with an interest-free period is opened at the selected bank or arrives by mail.
- The billing period begins - the time for which you buy with a card; in turn, the bank controls the amount of expenses and usually provides 30 days for this. Often the beginning of this period is considered the moment of activation of the card (sometimes the first operation using the card is the starting point).
- The grace period of a credit card begins, it is also called a billing period. During this time, the debtor is obliged to return to his creditor all kindly provided funds. To avoid paying interest on the loan, it is enough just to return the entire borrowed amount in a timely manner.
The interest-free period for using bank finances is summed up from grace and settlement periods, so the total is at least 50 days.
When you need to pay interest
In cases where the funds taken on credit cannot be fully repaid, the bank will begin to charge interest on the money spent during the settlement period. The grace period end time is the date of making the minimum payment, which is 5 to 10 percent of the total debt, plus interest for using the loan.
At the end of the first billing period (thirty days), the second and subsequent ones will begin. It will act simultaneously with the payment period. This means that by repaying the debt on previous purchases in a timely manner, it is quite possible to use the card to make new ones.
Specificity of calculations
The determination of the amount of accrued interest directly depends on the duration of two periods: payment and settlement. For a simpler explanation and understanding, it is better to resort to a specific example.
Example
The beginning of the billing period is considered the moment when a credit card is received with an interest-free period in the bank or, in some cases, its activation. If we assume that the activation date of the card was March 1 and 30,000 rubles were spent from the card in a month, then April 1, that is, after 30 days, will be the end of the first billing period. The bank will summarize and find out how much finance was spent over the past month, and provide the client with a notification indicating the amount of debt. In this case, it will be 30,000 rubles. Information can be provided in several ways:
- SMS notification;
- Internet banking;
- call to the call center of the bank.
Then the payment period will follow. Suppose it is 20 calendar days. Thus, it turns out that it will end on April 21. Summing up both periods, we get 51 days, which bankers present as a grace period for a credit card, or interest-free.
It turns out that a client who is not eager to pay interest for using bank money will have to reimburse all costs until April 21. This does not mean that the entire amount must be returned at a time, it can be divided into several payments, the main thing is that by April 21 the whole amount should be on the card (in this example - 30,000 rubles).
If you need more funds
It is important to note that a credit card with an interest-free period does not prohibit further use of credit funds during grace periods. You can continue to purchase with a credit card, if, of course, the credit limit allows. If, in addition to the already borrowed funds, another 5,000 rubles were needed, and they are on the card, the client has every right to use them, but in order not to pay credit interest, it will be necessary to return not 30,000 rubles until April 21, but all borrowed 35,000 rubles.
If it is not possible to fully repay the debt, it does not matter. Just by April 21, the client will need to make at least the minimum payment amount. In some cases, it varies from 5% to 10%.
For this example, suppose that the minimum payment should be 10% of the amount owed. Thus, at the end of the grace period, a minimum of 3,000 rubles must be credited to the credit account. All information is usually contained in statements that banks try to provide in writing to their customers. They take into account transactions for the billing period, that is, until April 1.
The next billing period, which will last from April 1 to May 1, deserves special attention. Until April 21, two periods intersect and overlap. That is, if the debt is not paid in full by April 21, the minimum payment amount will be calculated taking into account the total debt as of May 1.
In the considered option, 30,000 rubles were spent first, 10% of which was paid as a minimum payment. Then, after April 1, another 5,000 rubles were withdrawn from the card. Thus, the credit card debt as of May 1 will amount to 32,000 rubles, and the minimum payment, therefore, will be 3,200 rubles. It will be required to deposit funds before May 21.
It seems extremely attractive banking offer loans with a long grace period of one hundred days or more. The first settlement period for such cards, as in the first case, is 30 days, and the client can pay the bank debt without extra interest within the next seventy days.
Calculation of the interest-free period from the first acquisition
This option is also possible when the settlement period begins not from the moment of issuing or activating the card, but only from its first use. Such a credit card with an interest-free period is the most profitable for customers. This is due to the fact that after drawing up a card it is not necessary to use it immediately, it can be applied when necessary. That is, with this banking product, a person always has some kind of financial reserve. And interest is charged without any tricks.
Suppose that the card was received via mail on March 1, and paid to her for the purchase only on March 24. Thus, adding 30 days to this date, it turns out that the end of the billing period will fall on April 23. In order to avoid payment of interest, it is necessary to pay off all debt until May 13. That is when the grace period of 50 days ends.
When the payment period is strictly fixed
It is not always convenient to do mathematical calculations and find out the calendar boundaries of periods (preferential, settlement), so some banks assign specific dates of the month to determine periods. In this case, there is no reference to the moment of receiving the card or the beginning of its use. Often the end of the billing period is the first day of the month, and the end of the grace period is the 20th or 25th day of the month following the billing period.
Example
As an example, it looks like this: with a credit card received on March 1, the billing period will end on April 1, regardless of which day of the month the card was used. And the credit institution will wait until April 25th to repay the entire amount of the debt, or at least make a minimum payment.
Different conditions of banks
Even one bank can offer cards with different loan conditions. This tactic is applied by Alfa-Bank, which offers its customers two types of cards:
- A credit card with an interest-free period of 100 days, which begins upon receipt of the card and consists of a 30-day billing period and a 70-day grace period.
- Co-branded credit card with an interest-free lending period, opened in conjunction with large companies (such as airlines). For this banking product, the grace period is reduced to 60 days.
Creditors such as Home Credit and Sberbank are taken as the starting point of the billing period. The grace period of their cards is 50 days.
Russian Standard Bank increases this period by 5 calendar days, 30 of which relate to the billing period, and 25 to the grace period.
The Tinkoff interest-free period is the same number of days, but it starts with the first purchase. But a credit card with an interest-free period "VTB 24" has various varieties depending on the size of the loan, but the grace period is minimal and is 50 days.
The largest grace period
A credit card with an interest-free period of 200 days is extremely rare; today, such a product is offered to its new customers by Avangard Bank. The amount on such a credit card is small, but card maintenance is quite expensive. Yes, and you can use this offer only once.
Important points
When applying for a credit card, it is important to know that the grace period of most of them applies only to non-cash payments. Finding a bank that has a credit card with an interest-free cash withdrawal period among its loan products is quite difficult. Most lenders charge an additional cash withdrawal percentage.
By signing the contract, the client must familiarize themselves with the payment schedule and a number of mandatory bank commissions, which are exactly debited from the card and will be added to the total debt. As a rule, this is a card maintenance fee, SMS service, insurance.
It is necessary to check what date the bank will consider the time of receipt of funds. Not the fact that it will coincide with the day of the month when the money was paid. Usually, this is the time of receipt of funds to the account, the difference between the dates can reach 3 days, even within the same credit institution. Not to mention mail transfers and other payment systems.
When deciding whether to open a credit card, one must take into account the purpose of its use, from when the interest-free period is considered. You will also need to carefully familiarize yourself with the terms of the banks, which may vary significantly. There is no need to rush to the first offer you like, it is better to weigh the pros and cons in advance.