Why a credit card is needed.

Credit cards, like any others, have their own features and purpose. Unlike loans, they have a simpler system for borrowing money, which is why customers love credit cards.

However, before taking such a card, it is important to understand why a credit card is needed and how to use it correctly. After all, the answer to why a credit card is needed will influence the client’s decision to use it at all. Therefore, it's essential to first understand what it is, and then why and how to use it, in order to avoid paying unnecessary interest. 

Why do you need a credit card?

A credit card is a separate type of card. Unlike a debit card, you do not have to deposit funds onto it. It works as follows. The bank collaborates with the client, who earns trust. The client constantly uses other services or has even taken a loan. Then, the bank issues a credit card to him with a certain limit. In other words, the client did not transfer any money to this card initially. This limit can be minimal (there are many nuances). The client may take these funds (all or part) under certain conditions and then return them to the card with minimal interest or none at all. 

In general, a credit card is a payment tool that provides access to credit funds allocated by the bank. Unlike a debit card, which holds your personal money, a credit card allows you to use the bank's funds under certain conditions. Such credit cards differ for different clients in terms of limit and sometimes the conditions of how and when to repay these funds. Each user has a credit limit — the maximum amount that can be spent. At the same Time, the borrowed money must be returned within a certain time frame, usually with the possibility of a grace period, if the debt is repaid on time.

Who needs a credit card and why? 

Many clients are simply afraid to take a credit card. After all, its name is associated with debt. However, it is a loan that is much easier to repay than a loan. 

Overall, a credit card has a number of advantages (which are universal for most credit cards from various banks in Ukraine):

1. Convenient usage conditions. One of the main advantages of a credit card is convenience. It allows you to make purchases at any moment, even if there aren’t enough funds in your main account. 

2. A credit card can serve as a sort of safety cushion. Some bank clients take such a card just in case they need money. For example, if they need to urgently pay off a debt or make a large purchase. In that case, such a card is indispensable. For loans, you need to submit an application, while in this case, you simply withdraw money from the card. 

3. Credit cards always have a period during which no interest will be charged. That is, if a client manages to repay the entire amount by the specified date, they will not even incur any interest for using the funds. This is one of the most attractive aspects of credit cards — the existence of a grace period. During this time, usually from 30 to 60 days, you can use the bank's money without any interest. If the borrowed amount is repaid by the end of the grace period, no interest is charged, making the use of the card completely free.

4. Many banks also practice increasing the credit limit. This usually happens for several reasons. For example, if a client constantly borrows money from the card and repays it reliably. This builds trust with the bank. Often, the limit can increase if the client’s income is growing on other cards from the same bank. 

5. Credit cards often come with discounts, bonuses, or cash back. Many banks offer their clients credit cards with loyalty programs. These can include discounts with the bank's partners, bonuses for purchases, or a return of part of the spent funds as cash back. For example, for every purchase in certain stores or product categories, you can earn bonus points that can be exchanged for goods or services. Additionally, some cards allow returning up to 5% of purchases back to the account.

Credit cards often provide additional protection for purchases and insurance. If an item purchased with the card is damaged or lost, many banks can reimburse its cost. Moreover, some cards offer travel insurance services, including medical insurance, baggage insurance, and flight delay insurance.

How to choose the right credit card in Ukraine in 2024?

Many banks offer different conditions for obtaining credit cards. 

What to pay attention to: 

1. Interest rate. 

2. Credit limit size. 

3. Availability of bonus programs.

4. Fees and hidden charges. 

Some cards offer additional services, such as insurance, access to airport lounges, and mileage accumulation programs. These benefits can be useful for travelers and business people.