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Too Late to Save for Christmas Getaway? Why Not Get a Credit Card?
Too Late to Save for Christmas Getaway? Why Not Get a Credit Card?
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Too Late to Save for Christmas Getaway? Why Not Get a Credit Card?

Money254
Doris Kendi
December 21, 2021

Times are hard. Therefore, although many of us would want to bathe in the salty ocean water as we expose our skins to the coastal sun, our pockets are screaming otherwise. Heck, some of us do not even have enough for Christmas dinner, let alone enough to burn on our way to the village to shake hands with our beloved. It is tough!

It is even worse if you have a family or little ones looking up to you to make magic happen. So what do you do in such situations? Do you get an emergency loan from your local bank, get a quick mobile loan or call a few friends to help you out? 

Although all these are good options, they might not be very realistic at the moment. Some of them are also pretty expensive in terms of the interest charged. So why not get a credit card? Although spending on a credit card also counts as a debt, it can be a far better option than all the above. 

A credit card comes with a variety of benefits. The main advantage is that although it charges interest like any other debt, it has an interest-free period that, if you correctly utilise, you get to spend money for free. Did that pique your interest? Continue reading to find out more. 

What’s Credit Card Interest?

Credit card interest is the price you pay to the issuer for borrowing money. When you make a purchase using your credit card, the lender/credit card issuer pays the seller in advance for you. When you pay the credit card bill, you pay back the lender for the said bill and any interest accrued and applied to the account.

Credit card interest is typically shown as an annual percentage rate or APR. 

What’s an Interest-Free Period and How Is It Calculated?

An interest-free period is the maximum number of days that you will not be charged interest on the amount spent provided you settle the bill by the due date. The interest-free period ranges between 30-55 days in Kenya, depending on your credit card issuer

What you spend doesn’t accrue any interest if you settle your bill within the interest-free period. Any balance not settled within this period is carried over from one billing cycle to the next and is referred to as a revolving balance. This is what accrues interest.

To fully benefit from the interest-free period, you need to: 

  • To settle your current credit card balance in full by the due date.
  • If you have a balance, pay it in full before the next due date. 

How The Interest-Free Period Works

To benefit most from the interest-free period, you have to time your expenditure/purchase well to get the longest period. 

This is because the interest-free period starts from the first day after your last statement. So let’s say, you get your credit card on the 22nd of December with a 50-day interest-period. The billing period ends on the 21st of January, when you receive a statement of all the purchases you have made during the 30-day period. 

You will then have an additional 20 interest-free days in which to repay what was spent in those 30 days without incurring any interest. That is, you have to repay in full by the 9th of February, 2022, to avoid paying any interest. 

With that in mind, to get the full 50 days of free interest, you will need to make the purchase you need on the first day of the billing cycle - in this case the 22nd of December. For example, if you want to get your parents a large appliance as a gift, you can get it then and only have to repay in early February. 

In contrast, if you make a purchase of the same appliance on January 5, 2022, (which is 15 days after the start of the billing period), you will now have 35 interest-free days since the repayment will still be due on February 9, 2022. 

The closer to the end of the billing period you make a purchase, the fewer the interest-free days you get. 

How You Can Utilize Credit Card Interest-Free Period This Festive Period

If things are not looking too good this festive season and you still want to make it special for your loved ones, a credit card can be your savior. Experts believe that credit cards are the best for emergencies or when you need instant money. 

This is because if you practice good credit card habits, you can get to use them for absolutely free. Unlike any other type of debt, credit cards offer an interest-free period where you get to enjoy the money without it accumulating interest. 

Hence, do not let the holiday season be all dark and gloomy. If you qualify for a credit card, visit your local bank, get yourself one, and let yourself and your loved one have a fantastic holiday season. Maybe you can not use it to fund a full-blown get-away to the beach full of flights and transfers, but you can at least ensure that your loved ones are well fed during the holiday season. A quick outdoor picnic would not hurt. 

Here are tips to help you fulfill this wish while still spending within your means: 

  • Ensure to pay outstanding credit card dues by their due date. Ensure to understand your issuer’s interest-free period so you can pay the dues before they start accumulating interest. 
  • Avoid withdrawing cash through credit cards. A credit card is not a debit card. So do not use it to withdraw some money as this attracts interest from the get-go - interest can be higher than the normal interest. This in credit card lingo is called cash advance and will typically come with a cash advance fee. 
  • Practice good spending habits. Although you now have money to spend, do not just spend on luxury and unnecessary consumption. Keep in mind that this money is not free and will be paid back.  

Other Benefits You Can Gain From Using a Credit Card This Festive Season

In addition to the interest-free period, credit cards have many other benefits. I mean, who doesn’t want to enjoy great perks while spending money? 

Here are some benefits you get to enjoy as you use your credit card this festive season.

Cash backs, refunds, credit points

A lot of merchants in partnership with credit card issuers offer great discounts, cash backs, and other benefits when you spend using your credit card. 

To take maximum advantage of this perk, check on your credit card offer section for more information. Alternatively, you can contact your issuer for this information. 

As an example, during this period, you can enjoy 100% financing for up to 6 monthly repayments at 0% interest using a KCB Credit card on any product or service at AutoXpress branches countrywide.

Avoid going through a miserable holiday season

Times have been hard. But if you have kids, you know that this is not a good excuse to have a miserable holiday season. They want to have a good holiday season. 

So a credit card can come in handy to save the day as long as you put in place a plan to settle the bill by the due date. 

Protect your money

There is a high risk of losing your money with all the partying that comes with the holiday season. For example, after enjoying drinks with friends, you might lose your wallet, and it is too late by the time you realize it. 

But with a credit card, you do not run this risk. As soon as you realize that you lost the card, report it to the issuer immediately, and you do not lose any money. 

WRAPPING UP

One of the best life lessons you can learn is utilizing every available opportunity to your advantage. Hence, if times are tough for you at the moment, a credit card might be a great opportunity to have a good Christmas for you and your loved ones. 

However, before you commit, ensure you educate yourself about the dos and don’ts of a credit card and ensure you clearly understand your issuer’s terms and conditions. All in all, enjoy the festive season and use your credit card wisely. 

Doris is a finance professional, freelance writer and SEO expert. She has experience helping businesses of all sizes create content that helps improve their site quality and increase their online traffic. She is a personal finance and wealth creation enthusiast and a frequent contributor to Money254. Visit Doris' personal website to learn more about her work.

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