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Long the grace period is increasingly a decisive argument in favor of choosing a credit card. What pitfalls are lurking for the long "grace"?
is Called "coronarica" the demand for the restructuring of debt has led many borrowers to draw attention to a credit card with a long interest-free period. Often to get a card with decent credit limit faster and easier than through your Bank vacation credit. Extended grace period allows you to reduce your monthly payments, easier credit load and reduces the risk of arrears. However, the long grace-period is not always beneficial to the card holder.
Long grace period: what's the catch?
the notion of an interest-free period on credit cards has long since become commonplace and almost no one raises questions. The standard grace period is 50-60 days and consists of the calculation and payment periods. Within the first 30 days you make a purchase in the next 20-30 days to repay the resulting debt. If you repay the entire debt by the deadline, the interest for the credit money can not pay. The only difficulty, which can in this connection to occur is to understand when exactly starts and ends the billing period and when payment date. In different banks the beginning of the grace period may be:
the first day of a calendar month; the date of the contract; the date of the first debit transaction; date of card activation.
the Procedure for calculating the grace period is fixed in the contract, so the difficulties with understanding the terms of repayment usually does not occur.
But extended grace period on a credit card can be confusing to the unsuspecting borrower. As in this case lasts for the billing period? Do I need to make some interim payments? When you need to repay the purchases made at the beginning and at the end of the grace period? The answers to these and other issues in relation to cards of different banks may vary.
Ad block What is fair "grace"?
Most banks apply credit card two schemes of calculation of the grace period, which is popularly called "honest" and "dishonest" grace period. Both definitions are relative, because the difference between the calculation procedures is only the minimum number of days allocated to the repayment of any of the transactions of this period. For clarity, we take credit card "100 days without interest" the alpha Bank and "240 days without %" UBRD.
On the map of Alfa-Bank all purchases made during 100 days from the opening date interest free period, get into the action of one "grace". New grace period is resumed only after payment of entire amount of arrears accumulated in previous "Grays".
Example. You have received the card on August 1 and the next day made her first purchase. As the grace period on the card "100 days without interest" starts from the date following the date of the first transaction in our case it will be opened August 3 and runs until November 10. Arrears on all purchases made in this time interval, you will need to repay before November 10. Thus, the claimed 100 days without interest will only apply to the first purchase and for subsequent operations period actual interest-free use of money will decrease. The shortest "grace" will have transactions in late October — early November — it will be less than a month.
On the map UBRD use different calculation scheme. The first grace period on the map, "240 days without the %" opens at the date of conclusion of the contract and lasts for 240 days for purchases made from the date of the beginning of "grace" before the date of registration of the contract in the next month (billing period). For purchases made in the next payroll period, a new grace period.
Example. You have a credit card on 10 August is the start date of the first grace period. All purchases made from August 10 to September 10, enter the first billing period, and the arrears have to be paid until 10 April of the following year (240 days from August 10). Purchases made from September 10 until October 10, fall into the following billing period, and set him on a new grace — may 10. Thus, the shortest "grace" on the map "for 240 days no %" will be not less than 210 days. Also not a 240, but, at least, the difference is not as great as in the case of the map of alpha Bank.
say which scheme is preferable for the borrower, hard. It's easy for someone to focus on one final repayment date of the debt, but for someone it is more convenient when the interest free period are constantly renewed.
do I Need to make some payments during the long "grace"?
the Answer to this question again depends on the conditions of a particular Bank, but often Yes. Even if the Bank promised 100 or 200 days of interest-free use of loan money, this does not mean that all this time you can only spend and pay nothing. Usually a long "grace" is broken down into several pay periods, during which the need to make minimum monthly payments — 3-10% of the outstanding amount. If you make recommended Bank payments without delays and in full amount, the entire amount of the payment will go to the repayment of principal and interest on the debt will not be charged. If delay or not make the minimum payment, the contractual interest will immediately accrue on the entire amount of debt since the time of its occurrence, and a grace period "will turn into a pumpkin."
the Exceptions to this rule are, but they are few. So, on the map, "120 days" Bank "Opening" calculation period is 90 days, during which you can pay by card and not make even the minimum payments. The fourth month begins the pay period, the end of which you need to repay the entire debt on purchases for the previous three months. Simultaneously with the payment period opens a new grace period for transactions made in this month.
Example. You get a map on 10 August is the start date of the grace period. In the period from August 10 until November 10, you can use borrowed funds and pay nothing to the Bank. From November 10 until December 10, will operate the pay period for which you need to make it all spent the previous three month money. The transactions after November 10, will be in the new "grace", which will consist of three months of the billing period and 30 days in the payment period.
the Fact which operations still have to pay interest?
On the cards with both standard and long interest-free period, there is a list of operations on which the action of "grace" does not apply. Often "out of favor" and get cash withdrawals and transfers. Not only that, for encashment or transfer of loan money, banks typically charge higher fees, and the interest for these operations is accrued from the first day, at a rate which is different as predatory and not name.
For comparison, the credit card "110 days" by Raiffeisenbank: for non-cash purchase after the grace period interest is charged at a rate of 27.5—28.5% per annum, and for cash advances at the rate of 49%. As they say, feel the difference.
Another interesting example is the "Card of possibilities" from VTB with a grace period up to 110 days. The private Bank ATMs with this card due to credit limit you can withdraw up to 50 thousand rubles per month. "Free" means no fee for the results within the specified limit. But under the grace period, these operations do not fall and the Bank from the first day accrues interest at a rate of 34.9% APR. For "grace" on this card every month to make a minimum payment of 3% of the outstanding amount plus interest on the withdrawals.
With the repayment of debt on the map VTB has another subtlety: to hit a "grace" on it enough only to repay the debt on non-cash purchases. It features a "Map of opportunities" from most of the credit cards of other banks subject to compliance with the terms of the grace period before billing date is required to cover the entire amount of debt. At first glance, this approach facilitates the implementation of the conditions of the grace period, as the required payment may be less than the full amount of debt. But keep outstanding debt for cashing is particularly disadvantageous, since it is charged higher interest. It is important to remember that the order of cancellation of credit card debt VTB is the same as the majority of the banks: a debt for withdrawals and transfers after debt is repaid for non-cash purchases.
Thus, to repayment of the loan in full to get rid of "gold" per cent for cashing fail.
Even less ceremony with borrowers ICD. From the card "more" per month allowed without a fee to remove up to 50% of credit limit, however, any operation on cash withdrawal immediately terminates the current grace period on past purchases. For the resumption of "grace" will have to repay the arrears and to make a new operation that fall under the grace period.
the Most loyal to the cashing your credit cards apply Alfa-Bank, which, by the way, and put in the time, the fashion for long "greasy". Grace period on credit cards the Bank does not only apply to cash purchases, and cash advances. Until recently, it was a distinctive "chip" cards of Alfa-Bank, but now-like conditions began to offer other banks. For example, the map "Rapture" of the Bank "East" grace period up to 90 days is provided on all purchases and cash withdrawals. Even further in his generosity went UBRD: on the cards "Want" and "Cash" under "grace" includes non-cash purchases, cash withdrawals and even translations.
If to speak about average "in the hospital" conditions, the interest-free period on credit cards of most banks is only valid on cash purchase. Operations on cash withdrawals and transfers are usually subject to higher Commission and threaten to depart from "grace".
what is still needed is a long grace?
credit Card with a long "grace" is not only a comfortable repayment of debt for purchase, but also the opportunity to refinance loans of other banks. Many banks (Tinkoff, Alfa Bank, OTKRITIE, UBRD, etc.) allow the Commission in the framework of the interest-free period to transfer the loan funds for repayment of the loan to another Bank.
for Example, credit card "Tinkoff Platinum" once a year without interest to repay your car loan, cash loan or credit card debt to another Bank. This service is called "balance Transfer". The maximum amount you can transfer depends on how to apply for repayment: according to the account details — up to 300 thousand rubles, according to the details of the card — up to 150 thousand rubles.
to Issue "balance Transfer" on their own not to do this, you need to contact the Bank via live chat, email or phone. After the transfer is complete the resulting debt can no interest to repay within 120 days. To use a credit card for purchases after the balance transfer is possible, but undesirable: while the debt will not be repaid, all payments will go primarily for his redemption. The debt to other transactions until the debt is paid on the balance transfer is charged will not, accordingly, these operations will automatically fall out of grace period and will be subject to interest. For this reason, to transfer balance you need to pay down their card debt and deactivate all paid services.
to Use a credit card for purchases after the balance transfer is possible, but undesirable: while the debt will not be repaid, all payments will go primarily for his redemption. The debt to other transactions until the debt is paid on the balance transfer is charged will not, accordingly, these operations will automatically fall out of grace period and will be subject to interest.
With card Alfa-Bank can repay debt on the credit card of another Bank. The translation is executed through the mobile app under "Payments" → "Transfer of debt". Maximum transfer amount more than the "Tinkoff" — 800 thousand roubles. Just per year you can make up to three transfers.
to pay the balance transfer without a fee, you must comply with the following conditions:
to make a transfer one payment for the entire amount of the debt on the card at another Bank within 14 days after the transfer, apply for closing of contract credit card of another Bank; during 100 days from the date of transfer to close it.
to Provide Alfa-Bank confirmation of closure is not necessary — this information Bank checks on their own. If the card of another Bank will not be closed for 100 days, Alfa-Bank will write off the translation provided by the Treaty Commission.
maps With "120 days without %" Bank "Opening" it is also possible to repay the debt on the credit card of another Bank. In refinancing without a fee, the money from credit cards we can transfer up to four times a year. If after a certain period of time card of another Bank will not be closed, the Bank will debit the Commission is 3.9% of the amount of refinancing plus 390 rubles.
checklist: things to remember when choosing a card with a long "grace"?
1. During the grace period is necessary every month to make minimum payments, if provided for in the contract. In the late payment grace period is terminated and the whole amount of the debt accrue interest. Given the fact that interest on credit cards is traditionally high, it is better to repay the entire debt until the end of the grace period.
2. Bank fees in the absence of their money on the card is also debited from the credit limit. If you have activated the card and it was charged the service fee, the debt will have to repay, even if you do not use the card. Particularly insidious in this sense, the card service fee which is deducted every month.
3. Withdraw and transfer money from credit card profitable. First, usually it is a high Commission, and secondly, these operations are often not included in the grace period. Interest for cash withdrawals and transfers are charged at an increased rate, which may exceed the rate on non-cash transactions twice. In conditions when the use placed on accounts and deposits of money banks are not willing to pay customers more than 5-6%, give the Bank 30-40% by credit card seems a monstrous injustice.
4. Cards with long interest-free period can be used for refinancing of credits of other banks. After the balance transfer and until full repayment of the debt from the card is better nothing more to spend, as these operations may accrue.
Julia KRIVOSHEEVA for Banki.ru
Illustration – Banki.ru
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