What you need to know before taking out a credit card

  • by stas enero 16, 2022
  • 357070

Cards are the most widely used means of payment in the world; practically everyone of legal age has between 1 and 2 cards.

Cards, in addition to being a means of payment, are used to make other transactions such as cash withdrawals.

In addition, some cards offer points, discounts and other bonuses.

In the list we show the characteristics of each card so that you can compare and decide which card is more convenient.

What is a credit card?
Credit cards offer a credit to the customer, i.e. the bank is offering a loan (credit) for the purchase made.

With the purchase on credit you are making the payment without having that money yet.

How do credit cards work?
The initial payment is made by the bank and at the end of the credit term you must return the amount of the purchase to the bank.

The bank will automatically deduct the amount of the purchase at the end of the settlement period.

Credit cards are the most widely used payment method in the world, they are more complex and versatile as they offer different offers to the customer so that they can be better adapted to the consumer’s use.

However, young people are increasingly reluctant to use this type of card for fear of becoming over-indebted.

What payment methods are available?
Regarding payment methods, most of the cards allow the repayment of all purchases at the end of the month or the beginning of the following month, and without interest.

There are other cards where it is possible to split the repayment of the purchase over several months with interest ranging from 20% to 27% APR.

Credit cards are therefore a financing system, most banks offer 25 days at 0% TIN, i.e. 25 days interest free.

This type of cards are the most requested, the customer makes the purchases and these amounts are returned at the end of the month or at the beginning of the following month without commissions.

The disadvantage occurs when there are delays in the refund and the limit of 25 days is exceeded, in such cases the bank applies commissions and interest that can amount up to 30% APR.

Advantages and disadvantages – Credit cards
Credit cards offer security, especially when traveling. In case you run out of money, instead of applying for a quick credit to obtain immediate liquidity, you can «pull the card» and make use of the 25 days without interest.

However, it is important that you are aware of the fees for withdrawals and currency changes that the card issuer may apply.

Credit cards are an alternative if you are abroad and need money urgently.

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