Advertising insistently assures us that any bank card holder can receive money without interest for quite substantial periods of time, which can be one to two months, or even more. Many suspect that this is nothing more than a publicity stunt. However, for serious banks such frauds can significantly spoil the image. There is no deception here. It is only necessary to carefully study its conditions before signing an agreement with a credit institution. So what is under the attractive phrase: "grace period for loans"?
Speaking literally, this is the period until the end of which you can use
borrowed funds without paying interest. In theory, everything is simple, but in practice,
credit cards with a grace period issued by different banks work differently.
What you should pay attention to
Firstly, the concept of "grace period", as a rule, applies to operations on payment of purchases from the card, and not on cash withdrawals. There are, of course, exceptions, but before concluding a contract, you must definitely clarify this point.
The second mistake that many card users make is the assumption that you can use the money withdrawn from the card “for free” during the period stated in the advertisement. In fact, this is not always the case. So, if the grace period of credit is 60 days, this does not always mean that by removing money from the card at any time, you can return it during this time and not pay interest.
In more detail, the "interest-free" use of borrowed funds consists of two stages:
- Estimated (time when you can spend money on the card);
- payment (begins after the settlement and is given to fully pay the debt).
It is these two segments in total that give the promised figure of 50, 60 or even more days of interest-free use of money. With the second stage, everything is simple, this is a fixed number of days indicated by the bank, often equal to 20. But the settlement period can be determined in different ways. If a new credit card is received , the grace period may begin at the time of:
- card activation;
- first withdrawal of funds from it.
In the future, this period can be determined in the same way and equal:
- the number of days remaining until the end of the calendar month;
- a fixed number of days from the date of the card transaction (sometimes equal to the payment period).
So, in the first case, if the amount was withdrawn on the 1st day, then the grace period for it will be 50 days (calendar month + 20 days of the payment period), but if you carry out a similar operation on the 15th day, then the funds will remain available (15 days before the end of the month + 20 days of the payment period = 35 days).
In the second case, and this is characteristic of inexpensive plastic, the interest-free period can be as little as 20 days.
What is the benefit for the bank
It turns out: a certain amount of time you can use the borrowed funds for free. Why do credit institutions go for it? In fact, the grace period of the loan is a service beneficial to both parties. The user has the opportunity to make purchases on favorable terms for himself (if he manages to pay off the debt on time). Well, the bank will receive its rather large percentage (over 20% per annum) if the client does not pay off the debt upon completion of the interest-free phase. By the way, if an amount of 30,000 rubles was withdrawn from the card, and before the end of the grace period 25,000 were repaid, then the percentage for using the funds will have to be paid not from 5,000 rubles, but from the entire amount.
Thus, having carefully studied the conditions for the provision of funds, you can competently dispose of them.