Credit cards

What is a credit limit and how is it used
A credit limit is the maximum loan amount available on a card that the bank allows the customer to use. Within this limit you can pay for purchases and some other transactions without prior approval.
A card with a credit limit is often used as a short‑term financing tool. The key feature is that you are oblig’ed to return the spent funds according to the bank's terms and within the set deadlines.
Grace period and how it works
The grace period is the time interval during which purchases can be repaid without accruing interest provided they are fully repaid within the set term. It does not apply automatically to all transactions and has its own restrictions in the bank's rules.
Usually the grace period applies to cashless transactions in retail chains and online. Terms differ between banks and can change, so you should check them in your bank's current tariffs.
Which transactions does the grace period cover
The grace period often applies to purchases of goods and services where payment is processed as a POS or online purchase. Banks treat such operations as revolving transactions and allow deferral of expenses until the end of the grace period provided the balance is paid in full.
It is not uncommon for certain transactions not to qualify for the benefit — for example utility payments, transfers to other cards or some special categories in the bank's rules. It is always worth reading the tariff terms because the concept of a grace period and the list of operations may differ.
Why the grace period for cash withdrawals is shorter or absent
Banks most often do not provide concessions for cash withdrawals or offer a much shorter period for them. This is associated’ with higher risk and instantaneous cash flows that are harder to control.
When withdrawing cash the operation is considered higher-risk lending, so interest charges begin from the day of withdrawal. Conditions may vary and should therefore also be clarified in the bank's tariffs.
What happens after the grace period ends
If the balance is not fully repaid by the end of the grace period, the bank starts charging interest according to the tariffs. Interest may be charged on the entire amount or only on part of it depending on the terms of the agreement.
The order of repayment may also change and additional late fees may arise. Since terms differ between banks and are updated from time to time, always check your bank's current tariffs.
Nominal monthly rate and effective annual rate
The nominal monthly rate is a formal indication that shows interest accrual for a month. The annual real rate, or effective rate, takes into account capitalization and additional fees and shows the actual costs for the year.
The difference can be significant since the nominal amount multiplied by the number of months does not always equal the effective costs. To compare offers, pay attention to the effective annual rate and known bank charges.
Example for understanding
This is an example. Suppose a conditional nominal monthly rate equals 2 percent and interest is capitalised monthly, then the effective annual rate will be approximately equal to (1 plus 0,02) to the power of 12 minus 1. Such an example shows that annual costs can be significantly higher than 12 times the nominal monthly rate.
Remember’ that this is an indicative calculation and actual conditions differ. Check the bank's current tariffs to see which terms apply to your product.
How the bank determines the credit limit
The limit is set based on your solvency, credit history and the bank's internal rules. The analysis includes income, expenses, stability of incoming funds and existing oblig’ations to other creditors.
Due to different criteria and internal risk management procedures, the limit may be lower than you expect. The bank takes into account both current data and the speed of available information, so the final amount often reflects a balance between the client's wishes and the bank's risk policy.
Minimum payment and how long repayment will last if you only pay it
The minimum payment is the minimum amount you must pay each month to avoid penalties, but it usually does not fully repay the debt. Part of the payment covers interest and the remainder goes towards reducing the principal.
If you pay only the minimum then the full repayment period can increase significantly and the total interest costs will grow. I will give a simple hypothetical example to illustrate this but remember’ that this is an example and actual conditions depend on your bank's tariffs.

The example uses hypothetical numbers. Balance 10000 units and minimum payment 5 percent of the balance per month.
In that case the first minimum payment will be 500 conventional units and the balance will decrease slightly after interest accrual if any.

If you want to shorten the repayment period it is better to pay more than the minimum and to plan your budget taking interest accruals into account. And remember’ that conditions differ between banks and can change, so you should check them in the bank's current tariffs.