Risks of using credit cards: loss of grace period, minimum payments and commissions
Quick Look
- Candidate of Economic Sciences Liliya Burkina warns about the key risks of using credit cards: loss of the grace period, the habit of making only the minimum payment and fees for cash withdrawals and transfers.
- At a rate of 50% per annum and a debt of 100 thousand rubles, payments can last for 7.5–15 years with a total overpayment of up to 83.3 thousand rubles.
AI-generated summary
Why It Matters
Credit card rates in Russia can reach 47–54 percent per annum. The grace period allows you to avoid interest if the debt is repaid in full on time, but certain transactions, such as cash withdrawals and transfers, are often excluded from this period and are charged from the first day.
Loss of the grace period, the habit of making only the minimum payment and fees for individual transactions are the main risks when using a credit card. Candidate of Economic Sciences Liliya Burkina told Gazeta.Ru about this.
“Credit card rates can reach 47–54 percent per annum. If the borrower does not repay the debt on time, the bank will begin to charge interest according to the rules of the agreement. (...) The minimum payment creates the illusion of control over the debt,” the expert warned.
According to her, with a debt of 100 thousand rubles and an annual rate of 50 percent, paying 10 percent of the balance plus accrued interest can stretch out payments by about 7.5 years. The total amount will reach about 141.6 thousand rubles. When repaying 5 percent of the balance, the term theoretically increases to 15 years, and payments to 183.3 thousand rubles. The calculation assumes that the payment amount gradually decreases along with the debt.
A separate risk is associated with cash withdrawals and transfers, Burkina noted. She explained that in many banks such transactions are not included in the grace period, are subject to interest from the first day and are accompanied by a commission of 3-6 percent. However, the exact conditions depend on the tariff of the specific card.
The economist advised spending only the amount that can be fully returned during the grace period. If this is not possible, it is more profitable to pay off the debt with savings, refinance it with a cheaper loan, or contact the bank in advance for an installment plan or restructuring.
What to Watch
AI outlook — possibilities, not facts
Increased awareness of credit card risks will lead to increased demand for financial literacy and debt management advice.
Likely · Within months
Banks may introduce more transparent rates and flexible repayment terms for credit cards in response to growing customer frustration with hidden fees and lengthy repayments.
Possible · Within months
Open Questions
- How will consumer behavior change as awareness of credit card risks increases?
- What measures can banks take to reduce the risk of delinquency on credit cards?
- How effective are alternative debt repayment strategies, such as refinancing or restructuring, in a high-rate environment?
