What is an e credit card. Credit cards in simple words - what are they for and how to use
The design greatly simplifies mutual settlements. Having such a card, you will never be left without money: credit cards can be used to withdraw cash from ATMs of banks of all countries, which is especially convenient for travelers and people who often travel on business trips.
Most financial and credit organizations issue credit cards with a grace period of lending. Within 50-60 days, the borrower uses the money absolutely free of charge, without paying interest on the loan.
It is important to note that the money withdrawn from a credit card is an inappropriate loan, which you can dispose of as you wish. Credit card holders do not inform the bank about where they spent the money, which is always very convenient.
If you decide to get a credit card, then you can easily do it in almost any bank in Russia. Thanks to the simplified design of plastic cards, you have to fill out a minimum of documents.
The difference between credit and debit cards
Quite often, the question arises of how the credit and debit cards offered by banks differ. always have a positive cash balance, they are designed to accumulate money, receive income from deposits and transfer salaries.
Credit cards have a slightly different purpose. Their balance may be negative, while the main task of credit cards is to provide the cardholder with money when he does not have enough of his own funds.
Practice has proved that credit cards are the fastest way to get inappropriate loans from a bank. Money can be withdrawn from them at an ATM of any bank, which is very convenient during travel and business trips.
Important Benefits of Using Credit Cards
If you have ever used credit cards, then you probably managed to evaluate all their advantages. A credit card in your pocket opens up wide opportunities for its owner, allowing you to get the missing amount of money almost instantly. It is suitable for payment for goods and services wherever terminals are installed.
For lovers of purchases in online stores, a credit card will be convenient, and in some cases the only way to transfer payment. In some banks, the functions of credit cards have the ability to exchange currencies, which is especially important when ordering goods and paying for services on foreign sites.
When is it worth counting on bonuses?
When choosing a credit card, be sure to check whether it will participate in loyalty programs. Quite often, with the active use of credit cards, banks accrue bonuses on them. These bonuses can be spent on discounts at affiliate stores, gas stations, beauty salons, restaurants, etc.
If a credit card is connected to a charity program, each time you pay for goods and services with a credit card, you will help sick children, veterans and orphanages. The whole process is fully automated, so transferring money for good needs does not bother you.
Important to remember
In no case should you forget about such a useful service as a grace period for a credit card. Within 50-60 days you can use the borrowed money absolutely free. To date, such credit programs operate in most banks.
Using a credit card can greatly simplify settlements for goods and services. The best option is a credit card connected to affiliate and bonus programs.
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Surely everyone has already heard more than once about offers from banks about the possibilities to get a credit card for free, but not everyone is aware of what benefits they can give and how to use them. For many, one word “credit” is immediately associated with “robbery”. Actually, everything is a bit wrong. We suggest that you read this article to the end in order to learn about all the intricacies of credit cards and thereby increase your financial literacy.
1. Credit card - what is it in simple words
Credit card (abbreviated as "credit card", from the English. "credit card") is a bank card that allows you to make purchases automatically borrowing money from the bank funds
A “loan” of funds occurs during the purchase transaction. Each card has a credit limit that can be used. Usually this amount is limited to a range of 300..500 thousand rubles, depending on the type of credit card, your income and the bank. Issued for a period of 2 to 5 years, after which they are automatically reissued.
Each bank has its own conditions. There is no single standard by which credit cards work. We will consider the most common conditions.
Grace period by credit card what is itOne of the benefits of credit cards is the ability to take advantage of grace period (or grace period), which allows you to return money to the bank without paying any interest and other overpayments. How much they took - they returned so much. Everything is honest and without fraud. Each bank sets its own grace periods (someone has more, someone less).
Note
The grace period applies only to non-cash payment. When withdrawing funds from an ATM, a commission will be charged (in most cases 3-5% of the amount). Therefore, it is better not to withdraw cash from a credit card, as it is extremely disadvantageous.
There are different types of credit cards, which, depending on their status, provide different opportunities for making payments. They are usually classified as follows:
- Classic
- Gold (Gold)
- Platinum
The most important parameters are:
- Maximum loan amount;
- Duration of grace period;
- Card service cost;
- Bonuses and cashback when paying;
- The percentage that you need to pay the bank if you go beyond the grace period;
2. Advantages and disadvantages of credit cards
Banks willingly give credit cards to almost every person in the hope that he will forget or not be able to make payment on the loan taken at the time. In this case, the bank will make good money (commissions, interest for the period, etc.).
However, credit cards still have many indisputable advantages.
- The ability to make purchases instantly, without having your own funds without additional trips to the bank.
- Solid bonuses and cashback from the bank. Thus, encouraging to use these cards and spend more.
- The presence of a grace period during which you can pay nothing for using a loan
- It is convenient to pay for purchases abroad. Plus, this is your extra money just in case.
- The ability to use the credit limit again and again
- There are free credit cards that do not require annual maintenance fees
- Having the ability to quickly take out a loan without interest is the motivation to do so. Moreover, this feeling is more developed for those who do not have free money, that is, for those who use credit cards.
- The bank is interested in taking commissions, interest, etc. from you. Therefore, you must be careful when signing the contract and further servicing the card.
- In order not to pay fines and interest, you need to remember about making a payment.
3. Best Credit Cards
There are a lot of offers on the credit card market. This is good, because due to high competitiveness, really good offers for the end user are born. Consider the best credit cards for 2019.
3.1. Tinkoff Credit Card
3.2. Halva installment credit card (SovcomBank)
4.5. Differences between a credit card and a consumer loan
Which is better: credit card or consumer credit? There is no single answer to this answer. Depending on the situation, both the first and second options may be better.
We list the main differences between a credit card and a loan:
- You can take loans regularly without contacting the bank
- You can take any amount not exceeding the established limit
- There is a grace period for which you do not have to pay interest. For a consumer loan, interest immediately starts working against you
- The possibility of quick repayment without going to the bank. When repaying a regular loan, trips to the bank are necessary, which creates inconvenience
4.6. Can I withdraw money from a credit card?
Credit card money can be withdrawn through an ATM. But a commission is taken. However, in the market you can find cards that allow you to do this without overpayments. To do this, you need to look specifically for such proposals.
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In simple words, a credit card is a plastic means of payment that allows you to pay with money provided by the bank under the terms of a loan agreement. You can use it both in Russia and abroad.
What is a credit card?
Credit card - the same loan, which, unlike consumer, can be issued for a period of up to 2-3 years, after which the debt must be paid off, and the card is reissued. At the same time, the bank sets a credit limit, i.e., the maximum amount of money that can be spent over a certain period of time. Such a restriction is set by the bank based on the age and solvency of the client, the presence of deposit and other accounts, property, a good credit history, etc.
Unlike a regular loan, the credit limit on the card is revolving, i.e. the maximum amount is set for one-time debt of the client to the bank and can be reused after repayment.
The card itself is a plastic plate that is protected from various damage: scratches, abrasion, water, sunlight, temperature changes.
In international practice, cards are sometimes made of metal, including precious (gold, platinum), for VIP customers.
Simplicity and ease of use is achieved thanks to the universal dimensions, which are determined by international standards. In most countries, the ISO 7810 ID-1 format is used, where the length of the credit card is 8.57 centimeters, the height is 5.39 centimeters, the thickness is up to 1 millimeter, and the rounding radius of the corners is about 3 mm.
Credit Card Features and Features
Thanks to the bank’s cooperation with international payment systems, a credit card can be used not only in Russia, but also in foreign countries. The card provides the following features:
- non-cash payment of goods and services at the expense of credit funds, including outside of their city and country;
- cash withdrawal at an ATM within the established limit;
- constant access to borrowed funds;
- lack of need to report to the lender about the purpose of the loan;
- ordering a plastic product via the Internet on the bank's website;
- free use of borrowed funds until the end of the grace period.
A credit card differs from a regular loan in the way it provides money. A loan is issued, as a rule, at a time, i.e. all amount at once. An exception is programs for business entities in which money may be issued in installments. This gradual provision of resources is called a line of credit. The card by the method of issuing money is just similar to the credit line, since funds are spent in parts, as needed. However, a revolving limit rule applies to a card account.
For example, with a maximum amount of 50 thousand rubles. the borrower made a purchase of 30 thousand rubles, then paid off 20 thousand rubles. The rest of the debt will amount to 10 thousand rubles, and the size of the unspent limit of 40 thousand rubles. (50 - 10). At the next purchase, the client can use credit money in the amount of up to 40 thousand rubles.
Another difference is that the loan is issued in cash, while on the card, non-cash payment is a priority, and withdrawal of cash is subject to commission.
Often a credit card is confused with overdraft, but these are different products. Overdraft is the provision of debt funds in excess of their own. The service connects to debit cards, often salary cards. The principle of operation is as follows: on the client’s card contains a certain amount of their own money, which are debited at the time of payment. As soon as their money is over, the bank starts lending to the cardholder for the amount of the purchase. For overdraft cards, as well as for credit cards, a spending limit is set, beyond which it is impossible to go beyond. In addition, there is another similarity - the presence of a grace period during which you can return the debt without interest.
At first glance, it might seem that these two types of cards are identical, but in fact there are fundamental differences:
- An overdraft card is always debit (most often salary).
- To spend your own money on a credit card, you need to deposit this money, but they arrive on a salary regularly.
- To pay off credit card debt, you usually need to replenish it yourself. According to the salary card overdraft, this happens automatically every time a salary is credited.
- Credit cards are characterized by a higher limit than overdraft.
- The grace period of overdraft cards is significantly lower or absent.
And most importantly, credit card debt can be returned much longer, using the possibility of repayment with minimum payments.
Bank details
Each plastic carrier has a front and back side. On the front side some information, a picture or logo of the issuing bank can be applied. The reverse side is most often plain. At the same time, the following elements must be present on the credit card:
- surname and name of the holder (if the card is registered);
- logo of the payment system (Visa, MasterCard);
- protective chip;
- magnetic strip;
- security Code CVV2, CVC2;
- place for signature;
- name of the bank that issued the card;
- card expiration date (month and year in numerical format);
- hologram;
- embossed card number, consisting of 16 characters (not to be confused with the account number).
Data that is not displayed on the means of payment, but is necessary to make payments:
- TIN and full name of the recipient;
- account number (assigned by the bank and consists of 20 characters);
- BIC - code used to identify a financial institution;
- correspondent account (assigned when registering a bank and used for settlements with other banks);
- full name of the financial organization.
Abroad, settlements on credit cards require the obligatory indication of the card's billing address. This is the place of residence of the client, which he indicated when applying for a card. In Russia, this attribute is not used, but sometimes a foreign online store may request it if you wish to make a purchase there. The owners of such stores know that the billing address is not tied to Russian cards, and are moving towards our customers. Transactions are conducted without reconciling the card's billing address. But sometimes they may not accept payment.
You can find out the full details of your bank card in the loan agreement by requesting information on the website or at the bank’s office or by calling the hotline.
What is a credit limit and tranche cards
After the bank decides to issue a card, a limit is set on it, that is, the amount of funds that can be used. Before this, the client is checked for solvency, for which it is necessary to provide documents confirming regular income. As a rule, its size is set at a level of not less than 15 thousand rubles. for the Moscow region and 10 thousand rubles. for other regions. If the official source of income is lower than required, some banks take into account the ownership of an apartment or car.
With time credit limit can be increasedif regular transactions are made on the card by contacting a bank branch with a corresponding statement.
Exceeding the credit limit is almost impossible, because the bank strictly controls the amount of funds used. But in some cases, the excess still arises for technical reasons. For example, when paying for a purchase at one of the outlets, the money was not debited from the card immediately, but on the next day. If the client at this time made another payment from the card account, it is possible to go beyond the established limit. In such situations, penalty interest may be charged for exceeding the maximum loan amount, the amount of which depends entirely on the fees of the servicing bank.
A card tranche is the amount of money that a bank has provided for a purchase. But here the calculation does not include the total amount of expenses per day, but the amount of each individual transaction. So, if the customer paid for food for 3,000 rubles. and then acquired household appliances for 10,000 rubles., there are two tranches of credit cards.
Debt Payment Methods
A credit card works a little different than a regular loan. After debiting funds, the client usually has a grace period. This is the period during which the money spent can be returned to the bank without paying interest.. If the client does not have time, then the amount of accrued interest is added to the main debt. Further, the debt will need to be repaid in monthly installments (partial payments) no later than the established date or to pay the entire amount immediately.
The algorithm is as follows: the bank sends a statement of the account, indicating the payment - usually about 10% of the total loan amount plus interest accrued over the past month. This will be the minimum amount that must be paid off. You can deposit funds to pay a loan in the following ways:
- cash through the bank cash desk;
- by transfer from another card;
- through an ATM;
- send the indicated amount by postal order;
- use payment terminals or Internet systems.
Ultimately, the full cost of borrowed funds consists of the interest rate and the commission for servicing a credit card.
The main types of cards
Credit cards can be classified according to several criteria.
By type, they are divided into standard (with magnetic stripe) and chip, and by the method of calculating interest - with a grace period and without it.
Depending on the payment system, credit cards are divided into international, widespread everywhere (Visa, MasterCard, American Express), and local, which are accepted only in certain banks of the country (Union Card, NPS).
By class:
- classic
- gold;
- platinum.
Depending on the status of the card, the bank sets the maximum size of the credit limit and provides an additional package of services, which may include discounts from bank partners, round-the-clock customer support, travel insurance, etc.
Co-branded cards and installment cards deserve special attention. Co-branded credit cards do not differ at all by the principle of use, but they have a great advantage in the form of accruing all kinds of bonuses from partners of the bank. The conditions of different co-brands differ in the way privileges are granted: receiving a guaranteed discount or accumulating points, which are subsequently exchanged for gifts or the same discounts.
Installment cards, unlike credit cards, make it possible to purchase goods and pay for them in installments without paying interest to the bank. However, after the time allotted for the payment of installment payments, interest begins to be charged. Thus, such cards are very similar to credit cards that have a grace period. The main difference is that you cannot withdraw cash from installment cards. Although this border is beginning to gradually erase. So, the Halva card allows you to cash out money, but only when you visit the bank and for no more than 3 months.
Now almost everyone in the wallet has payment cards. And very often among them you can see a credit card. She can help with some financial issues. But for the effective use of a credit card, you need to understand the features of its functioning and find out what it really is.
A credit card is a plastic bank card with a certain credit limit. In the modern world, credit cards are widespread. If there is a lack of own funds both in cash and for cashless payments in the retail and retail network, you can use the borrowed funds provided by the bank. Credit cards have seriously squeezed consumer loans in the banking services market.
How to issue?
Due to the high level of competition, the conditions for issuing credit cards at banks are becoming more and more loyal. Typically, the bank requires a passport and income statement. In some cases, a certificate may not be required. Sometimes the bank may request additional documents, for example, a passport or a driver’s license.
To get a credit card, it’s not even necessary to contact a bank branch. Many financial institutions provide the opportunity to issue it even through the Internet. After the card is ready, the client needs to contact the bank branch or order a delivery service. But, as a rule, the simpler the terms of registration, the more expensive it is for the client to use borrowed funds. It is easier to draw up a card if the client is already an active user of other products of a particular bank and has a good reputation in it.
How it works?
After assessing the solvency of the borrower, the bank sets a credit limit on the payment card. In each bank, the method of calculating a possible credit limit is different and may depend on many indicators: age, place of work, social status, availability of other loans, the quality of their services and much more.
When issuing a credit card, you should carefully study the tariffs, because at a low interest rate other fees may be hidden, which significantly affect the cost of borrowed funds.
The following points should be noted:
- The presence of a grace period (grace period) and the method of its calculation.
- Additional fees.
- Penalties for late payment of arrears.
- Availability of additional services and their cost.
Grace period
A grace period is a period for which the bank does not charge interest for using a loan. But you need to carefully study the method of calculating it. There are two ways:
- The period is calculated from the day of the first transaction (withdrawal of funds). That is, if, for example, a client withdraws money three times, then the interest-free period is calculated from the day the first amount is withdrawn. In order to start a new grace period, you must completely pay off the debt.
- The period is determined separately for each transaction.
The maximum interest-free period is usually up to 55 days. This service allows you to use credit funds for free if the borrower manages to fully repay the debt within the agreed period.
The grace period may not apply to individual operations. There are banks that provide an opportunity for an interest-free loan exclusively for settlements in a retail and retail network. All these points should be spelled out in the contract.
Cash withdrawal
Cash withdrawal terms should also be detailed in the contract. For cashing out credit funds, the bank usually charges a fee. A certain limit on the operation can also be set. The limit is usually set within one day, and can be removed after contacting the bank. If the client plans to withdraw an amount that exceeds the allowable limit, then you should contact the bank in advance and find out all the details of lifting the restriction. Often this operation is not done fast enough.
Settlements on the Internet: safety first
Many credit cards can be used to pay for goods and services on the Internet. To make an operation on the network, you must enter the following information in the appropriate fields:
- Name of credit card holder.
- The term of its validity.
- CVC2 code.
The CVC2 code is on the back of the card. It may not be available on Visa Electron Maestro cards. In such cases, it is necessary to apply to the customer support of the bank, and to clarify the possibility of using the card for settlement on the network.
If a third party knows this information, then he can make a payment without the owner. Therefore, it must not be reported to anyone.
How to pay off debt?
Typically, banks require a month to repay a certain minimum payment. It is 5-10% of the amount owed at the end of the billing period. Sometimes it is necessary to make a fixed payment. Interest for using a loan is deducted from this payment, but only if the grace period has already expired. The remaining amount is used to pay off the main debt. This amount will be available for a new withdrawal.
Additional fees
Debt servicing cost is also affected by additional fees. They may be charged in the following cases:
- For the issue of cash at an ATM and cash desk of the bank. At another bank's ATM, withdrawal fees may be higher.
- Fee for additional services: SMS informing, Internet banking, increasing the credit limit, blocking a card, re-issuance in case of loss, etc.
- For the status of the card. The more benefits and bonuses, the more expensive the card issue will cost.
This list is, of course, not exhaustive. In order not to get into the unpleasant situation associated with an additional payment, it is necessary to carefully study the bank's tariffs for servicing a credit card.
Cash-back is a refund of a certain percentage of the amount of the purchase to the card. This percentage may be different when calculating in various retail outlets and companies. Some banks do not return money, but accrue bonuses or points, which can then be paid in a certain retail and retail network. But some banks set a higher interest rate on credit debt if Cash-back is provided on the card. Thus, the entire benefit of this service can be reduced to zero if you do not have time to return the money before the expiration of the grace period.
How to use it effectively?
To use a credit card was beneficial, you should adhere to the following rules:
- Use it mainly for non-cash payments in the retail and retail network, as the bank always charges an additional fee for cashing out funds.
- Closely monitor the duration of the grace period and try to repay the debt within it. Even if you still need borrowed funds, money can be withdrawn again, and the bank will begin to re-calculate the grace period.
- To study additional paid services and, if possible, refuse them, if there is no need to use them.
- Use the SMS-information service. This service is usually paid, but it allows you to control card debt.
For many, a credit card is not only a convenient way to solve financial issues, but also a temptation for impulsive spending and shopping. Borrowed funds should be used in unforeseen situations or when it is really effective.
Many owners of a means of payment are interested in what a credit card is, how it looks, how best to use it. Credit cards are ubiquitous, they have different conditions, but they work on a single principle. What should everyone know who has decided to purchase this financial instrument?
What does a credit card look like?
Credit card bank TCS.
A credit card is a plastic rectangle in which a chip with information about the owner’s account is placed. The dimensions of the plastic carrier according to the standards are 85.6 x 53.98 x 0.76 mm.
The front side contains the following information:
- card number;
- the name and surname of its holder, if the card is registered;
- the term by which it is valid;
- logo of the used payment system;
- name of the issuing bank.
On the back there is:
- bank information;
- place for customer signature;
- security code used to make purchases online;
- magnetic strip containing map data.
The design of the plastic carrier is determined by the financial institution that issues it. With some credit cards, you can choose a design yourself.
Types of credit cards
The largest payment systems.
Credit cards are of the following types:
- Classic. They have standard loan conditions.
- Gold. Differ in the increased limit.
- Platinum. Additional services are available for them.
- Co-branding. Allow you to receive various bonuses when using, for example, a discount or accrual of points.
Types of payment systems can also be different. The most popular in Russia are Visa, MasterCard (Maestro).
Credit card terms
Offer from Tinkoff Bank.
If you give a credit card a definition in the simplest words, then this is a type of bank lending, in which a person gets access to money through a payment instrument, a plastic carrier. This type of loan is renewable, that is, the bank’s money can be used repeatedly.
The maximum amount of borrowed funds is determined when considering the application and depends on such factors:
- type of card;
- amount of income of a potential client;
- history of previous loans.
The interest rate for using borrowed funds in each bank is different. Here is an example of 5 popular banks and lending conditions in them.
When issuing a card, a specific rate is set after assessing the solvency of the client and is fixed in the contract.
Fact! In most banks, the percentage for using cash is slightly higher than for non-cash transactions.
Almost all credit cards have a grace period during which you can use borrowed funds without paying interest. To do this, you need to return the money spent to the account before it ends. The average interest-free period is 50-55 days, depending on the financial policy of the bank.
The grace period has its own nuances:
- Cash withdrawal at most institutions does not apply to this option.
- The interest-free period in each bank is calculated differently. Usually it is calculated from the moment of purchase or from the day of receipt of the account statement.
By regularly returning funds spent on the card within the grace period, you can use borrowed funds without paying interest.
Offer from the Renaissance Bank.
In the case when it is not possible to pay off the full amount of the debt, it is necessary to make a mandatory minimum payment. As a rule, its size is 5-10% of the funds used.
Most credit card banks have these payments:
- Commission for cash withdrawals, as a rule, does not exceed 2%.
- Card service for the year, usually from 150 to 560 rubles.
- Penalties for non-compliance with the terms of use are indicated in the contract.
- Additional services, such as SMS informing.
There are cards with free annual service and SMS informing, there are those where even an Internet bank is connected for a fee. Validity of cards in most institutions is 3 years. Next, the credit card is closed or reissued.
Borrower Requirements
Lending program from Alfa Bank.
There are standard requirements of the bank that must be met in order to receive a credit card:
- The presence of citizenship, for example, Russian.
- Check in. It can be permanent or temporary.
- Age should be in the range established by the institution. Usually it is from 21 to 65 years old, but there are special programs for young people from 18 years old and for older people up to 75-80 years old.
Without exception, all cards are issued upon presentation of a passport. The following documents may also be required:
- a second document for identification (for example, a passport);
- income statement;
- retirement certificate or student ID.
The exact list of requirements for the client should be clarified on the bank's website, or by calling the hotline.
How to get a credit card?
TKS co-branded cards with bonuses.
In order to draw up a card, you must fill out an application form. You can do this as follows:
- online
- at the bank office.
If the bank approves the application, an agreement is signed and delivery of the plastic carrier is made.
Financial institutions may offer to receive the card directly in one of the following ways:
- at the bank branch;
- take advantage of home delivery courier service;
- by mail.
Nuance! Some institutions after the activation procedure withdraw funds to pay a commission for annual card maintenance.
Debt repayment methods
Offer from the Agricultural Bank.
Credit card debt is repaid in the following ways:
- From any other card.
- Bank transaction.
- Through the payment terminal.
- Electronic money.
- Contributing funds to the cash desk of a financial institution.
Some methods of transferring money may incur a fee. This nuance should be clarified in advance so that the amount of the repayable debt does not decrease by the amount of the commission.
Advice! When choosing the option of depositing funds, you should calculate their receipt dates. Debt is considered repaid after crediting the money, and not from the time of payment. Therefore, to avoid penalties, you should not do this at the last moment.
How to use a credit card?
Offer from VTB 24.
You can use a credit card in this way:
- Paying her when shopping is a bank transfer.
- Cash out through an ATM, this is cash transactions.
It is convenient to connect to the Internet bank or use the mobile application to make transactions with the card. With their help, the functions become available:
- obtaining information on the amount of available funds;
- ability to control payments;
- money transfers;
- payment for various services;
- connection of additional options.
It should be remembered that, making any operations on the card, you can not tell anyone the PIN code and leave the plastic carrier out of sight. This is important for the security of the client’s money.
Features of credit cards
Cashback offer from RaiffeisenBank.
Plastic cards have these advantages:
- This is a universal means of payment, with which you can pay for any services or goods either by wire transfer or cash.
- You can make purchases without even having your own funds.
- When you go abroad and pay in another currency, an automatic conversion is performed.
- If there is a grace period, then you can use the bank without interest.
- Security. If the card is lost, the account is blocked and the funds are saved.
- This type of loan can be used repeatedly.
- Many banks, for example, Tinkoff Bank, offer cashback (refund of money spent by the client).
When issuing a credit card, it is necessary to carefully study all the nuances that may arise when using it. This will help to avoid unnecessary overpayments and will contribute to its most effective use.