Credit card – Don’t have one yet?

Today, 1.2 million credit cards are in circulation in Hungary, although their number has fallen sharply in recent years, partly due to the more cautious business policies of banks and the frustration of customers. If you are a bit of a good banking customer, you can hardly swim to try to sell you a credit card.

At first glance, a credit card is a great product

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Based on our earnings, the bank grants us a line of credit (usually two to three times our monthly net earnings) that we can use to make a purchase, free of interest, if we fully repay it by the 15th day after the monthly closing. (That’s why they advertise their credit cards so that we can use the bank’s money for up to 45 (51) days.)

Of course, if you are a bit late with your payment, it won’t be a problem. Then they charge you a few percent monthly interest on our debt and we owe it almost as long as we want. If we pay 2.8% of our debt (or 5% at the other company) plus interest every month, we can even owe it almost to the end of the world.

If that were not enough, co-branded credit cards offer additional discounts. Co-branded credit cards are those plastics that are issued jointly with a company. For example, you get up to 10% off your phone bill when you pay with your credit card, or 3% of your refueling with a card shared with another company, and even 1% of all other purchases are refunded if you refuel at that point, collect travel points that we can exchange for airline tickets.

In addition, you can apply for our main card with up to four partner cards, the annual card fee of which is sometimes released in the first year. There are also temporary promotions that, when you apply for your first credit card, you can even receive a European airline ticket as a gift.

We often get free travel insurance along with your credit card

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We haven’t even talked about prestige: you can get a gold credit card for as little as $ 170,000 a month, which can be a great blink at checkout. If your credit card is such a great product, you may not understand why not everyone needs it. Free, interest-free credit line, flexible repayment, post-purchase refund, free airfare, free insurance, high prestige.

Another thing nobody understands is why this is good for the bank and why credit card credit is given to everyone, even to people who do not require it. Why are we being invited to win the card “as a valued customer of the bank” and still mail our credit card today? Why is it worth it for banks to give a free airline ticket next to their credit card and even pay a serious commission to the credit card acquiring agent?

As with countless other cases, the point lies in the details. With so many benefits, let’s see what are the disadvantages of a credit card? The full amount of the purchase becomes chargeable at the moment that you are only one day late with a full refund or if you are repaying up to HUF 100 less than the full amount. In this case, the entire amount (not just the outstanding amount!) Will start to become an interest-bearing loan from the date of purchase (not the due date!).

The “monthly couple percent interest” is 2.95% (at another bank’s 2.99%) per month, which represents a 39-49% APR. That’s why the bank wants us to stay calm. As long as we only have a shortfall of $ 200, we will charge this nearly fifty percent on our total debt and on our purchases if we are unable to settle our total debt after closing the account.

Plus, the icing on the cake is the huge amount charged to your credit card. The annual fee of the credit card is 5000-9000 HUF (silver card), 12-19 thousand HUF (gold credit card), and almost 30 thousand HUF platinum card. The fee for keeping an account is 250 ft / month (that is, another 3,000 HUF / year), the overdraft fee is 3200 HUF / month, the postal payment fee is 250 HUF / month, the bank branch fee is 350 HUF / month, the late fee is 3500 HUF / month, etc The other bank has slightly lower costs (but higher interest rates), but it also charges extra money for changing the PIN and for the photo on the card.

With a credit card, the cash withdrawal fee is 2.5% (2% at another bank) but at least HUF 1000 and the amount is immediately 34% per annum from the date of withdrawal until the date of repayment.

With the many 1% refunds and 10% phone bill discounts, it turns out in the small letter that it is only true for a very limited amount. For example, phone bill refunds are 5% up to $ 1,000 for a silver credit card, 10% up to a maximum of $ 2,500 for a gold credit card. So we will not become millionaires with refunds either.

As well as a 4 + 1% gas station refund, you can spend up to $ 30,000 a month. There are those who, in a very unfavorable way to the bank, always pay back all the debts of their credit cards on time (they are the minority, most are guaranteed to slip at least once or twice a year on either the amount or the due date. a $ 3,500 default fee. But it’s even more common for credit card holders who have hundreds of thousands of debts to roll out of their debt for years.) These cardholders are called on every few months to take out a “super-favorable” loan for up to 4 too. The very favorable interest rate means that “only” 30% a year (34% THM) instead of 39% (44% THM).

Many people send a credit card as a gift and put it in their account, thinking that if you don’t activate your credit card, you won’t have to pay for it. Conversely, one type of card will be charged from the first month on, regardless of activation (such as a monthly account management fee). For the other type of credit card, the annual card fee will be the first charge only the following year (if the card fee is released in the first year), but from then on, you will automatically be charged a lot for nothing. So if you have an unused credit card, cancel it by phone today.

It is important to know the due date for payment:

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By law, it is not the date of transfer / payment of money that counts, but the date of posting. Therefore, it is in vain for you to transfer money from your own bank in time if it is credited after only two days. Likewise, it is useless to transfer the amount from your account with the same bank in the evening, if it occurred after the daily closing.

For many, a credit card plays the role of a security credit line, expensive. By dividing the many annual and monthly fees, we get a huge sum of how much this emergency reserve costs us. By then, it makes more sense to use your credit card credit line for the same purpose, with much lower annual charges.

Guess what percentage of credit card holders use their credit card properly?

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12%. The others either do not use it or pay interest on their loans. I recently read that banks in the United States have introduced that you have to pay $ 5 a month to someone who uses your traditional credit card to make a purchase. This is to encourage people to use their credit card.

I thought about a credit card (which was sent to me if I want to pick it up for free as a valued customer :-)), he knows that in the 3 selected store categories, the refund is 4%, otherwise 1%. (Refueling at the gas station can be up to $ 1,200 or $ 1,500 a month if you refuel for 30,000. But I usually refuel half of it a month.) Other costs are much lower than the market average.

But here too, I pay a minimum of $ 3,000 a year if I forget to pay on time, the penalty is just two thousand forints, plus a modest 44% interest, overdrafting for another two thousand forints, a monthly fee of $ 200 and more.

I barely buy a card because most of my spending is too small to preload my card, so there would be little refund. Otherwise, with a monthly spend of $ 50,000, the one percent refund is $ 500 in thighs, which is almost taken away by the monthly fee. Not surprisingly, most banks cannot automatically set your monthly credit card debt to be deducted from your checking account (Only the minimum payment can be deducted). I wonder why?

So I figured it was a pity to fuck with it. If I manage to save anything at all, it will not be more than 2-3 thousand HUF a year. That is, say, two hundred forints per month. Play with him for that much money.

 

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