What are the advantages of credit cards with a grace period

Cash withdrawals under the card's grace period

Sometimes such cards are referred to as banking products with a grace period. This English term indicates favorable ("warm") conditions for using a banking product. During this period, the bank gives the borrower the opportunity to use the loan while being completely exempt from paying interest. If the borrower repays the loan on time, no interest is charged. If the borrower fails to pay on time, the interest rate on the debt begins to apply from the very first day after the grace period ends.

Cash withdrawals during the credit card grace period have a special status. Most credit organizations set an interest rate for cash withdrawals. Most often, the rate ranges from 2.9% to 6.0%, and some banks charge an additional transaction fee, for example, 3.9% plus 399 RUB. This is because credit institutions incentivize borrowers to make cashless payments so the bank can track what you spend the borrowed funds on in stores or other places. A number of financial and credit institutions completely waive cash withdrawal fees, but the annual maintenance of such cards is quite expensive.

How the grace period principle works

Many borrowers cannot figure out how a 100-day grace period credit card works. In fact, this scheme is very simple; you just need to grasp its core mechanism:

1. The grace period begins from the moment the card is first activated, for example, via cash withdrawal or payment for mobile services, etc.
2. Fixed grace period. The bank independently specifies the date from which the grace period is calculated. For example, if the bank issues you a card on August 27 with a 60-day grace period, the next mandatory payment must be made no later than October 1, since 30 days are counted from the beginning of the calendar month—in this case, from August 1.

Unfortunately, the second option is the most common for a 120-day grace period credit card. The fixed date serves as the starting point for the borrower to fulfill their obligations. Therefore, you need to check the mandatory payment schedule in detail to avoid accruing loan interest. The best option is to receive the card at the beginning of the month, making it easiest to calculate your credit card obligations starting from the 1st of the current month the card was issued.

The first scheme is used very rarely and applies to banking products with a long grace period or a revolving period feature. In the latter case, you pay off the loan and can use the interest-free period again. Additionally, a mandatory payment is established for such cases during the interest-free period. Most often, this amount varies from 6% to 10%. Please check the exact terms in the tariff plan of your chosen banking product.

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How to properly use a credit card with a grace period

The bank has approved a card with a grace period for you. We explain how to calculate and use a credit card in practice to avoid paying interest to the bank.

1. Make any first transaction with the card, such as a cash withdrawal or an in-store purchase. Remember the date of the transaction.
2. Now check the agreement to see when the interest-free grace period starts (from the 1st of the month or from the moment of the transaction). Read the exact terms in the agreement.
3. Before the last day of the grace period, deposit the debt amount or the minimum payment requirement onto the card. The debt amount will be exactly equal to the funds you withdrew or spent using the card. The minimum payment must be verified according to the agreement. The bank specifies, for example, 6% of the debt, but not less than 800 RUB.
4. Next, if you have topped up the card account with money, check whether you can use the interest-free period again. As a rule, almost all credit cards have a revolving interest-free period status.
5. For the new period, likewise follow the credit repayment requirements so that you do not pay interest for using the bank's credit funds.

It is important to understand that some banking products, such as installment cards, also have a grace period that can range from 1 month to 36 months. Check the exact terms with the bank manager who issued your credit card with a grace period.

Interesting examples of credit cards with a grace period

On the financial services market, you can find interesting credit card offers with an interest-free period in 2019, both for pensioners, students, and other categories of borrowers.

• As an example, let us look at credit cards from Alfa-Bank, where Gold, Premium, or Platinum card types are available to you. When submitting an application, a credit limit from 300 thousand to 1 million RUB will be available to you. The card is available to adult citizens aged 18 and older. The interest-free grace period is 100 days. During this period, you can use the credit at a 0% interest rate. If you repay the credit funds on time, Alfa-Bank allows you to use the grace period again for the same amount or increases the credit limit by agreement with the borrower. Along with this, you must make a mandatory monthly payment on the card of at least 320 RUB, but no less than 5% of the principal debt.
• The VTB Group includes Pochta Bank, where you can apply for the "Zeleny Mir" credit card with an interest-free period. A credit line is available for an amount up to 500 thousand RUB, and the grace period is 60 days. If you fail to repay the loan on time, an annual interest rate of 19.9% comes into effect. Withdrawing cash using this credit card is extremely unprofitable. You will have to pay a 3.9% commission, and an annual interest rate of 29.9% applies to cash withdrawals.
• At Vostochny Express Bank, you can apply for cards with a 56-day interest-free period. An exception to this list is the "Prosto" card. You can choose credit cards with a 200-day installment plan from 40 presented banking products. However, this offer is valid only once, and subsequent revolving grace periods will be only 50 days.
• T-Bank has many offers, including the Platinum card, where the grace period is 55 days. However, if you pay off a debt to another credit institution, the interest-free period can be up to 120 days.
• Sberbank of Russia offers a Mastercard credit card with a credit limit of up to 600 thousand RUB and a 50-day grace period.
• ATB Bank offers the "90-Day Benefits" card, where a grace period applies to all banking product transactions for 92 days.
• VTB Bank offers the "Multicard" banking product with a credit limit of 1 million RUB for 50 days.
• Otkritie FC will offer you a unique product, the "Smart Card", which features a 55-day interest-free period with a limit of 300 thousand RUB, and if you fail to repay the loan during this period, an annual rate of 19.9% applies.

The credit card selection service offers you to apply for a profitable banking product that features an interest-free period with a 0% rate.