Credit card or the consumer credit
5 June 2008Distinction of the credit scheme gives a difference of debts’ repayment mode - in case of credit card revolving the client is obliged to repay a part of the sum monthly, and overdraft card obliges the borrower to repay at once all debts within one month.
Banks try to use various ways to attract clients in using credit cards. The most widespread ways of attraction cover grace period of crediting, decrease in the commission for service of the account. Recently some banks have started to introduce such service as cash back - when the holder of a card, having made purchase due to a credit limit, receives compensation from bank (in the form of percent from the sum of purchase) back on the account.
The sum of the consumer credit can be above, than a credit limit on card, therefore for essential purchase on credit is more preferable take advantage of consumer credit. Repayments on consumer credit are usually offer monthly payments while on a card the holder can adjust a level of credit burden. It means that the client can liquidate a debt with the minimal payments (usually 10 % from the sum of debts) and to stretch process of payment for a long term and can extinguish a significant part of the credit or the credit entirely. Having extinguished debts entirely during the certain term and used the term of grace period (grace period), it is possible to be released from payment of interests on credit at all.
