Due to the popularity that credit card has gained, this has aroused in many people the curiosity to understand the operation of this beauty.
It is difficult today to find a wallet that does not have at least a single card, many people have dozens of them. Why did he become so popular? First we must understand that credit card is just a means of payment, nothing more than that, and because of its practicality and incredible benefits, it has conquered the heart of the world.
The huge acceptance of the credit card, another aspect that has helped it become popular, is causing many people to abandon physical money.
Nevertheless, it is not the perfect and ideal payment method for all people. We’ll demystify in the next few topics how your credit card works and how it impacts right in your pocket after all.
Understand how the card works and its popularization
Credit card is an electronic means of payment. The card issuer (which is usually a financial institution) offers a credit limit for the customer to use in their purchases and payments.
The credit limit offered is based on the profile of each customer. This way, the customer can spend monthly up to that limit determined by the bank.
The value of all your purchases throughout the month, even in installments, may not exceed that limit set by the bank.
At the end of each month this bill has to be paid, and it comes in invoice form. And you must pay your bill so that more credit is released, otherwise you have the credit cut off until you pay your interest and interest on it.
So thanks to the credit card you can spend money that you do not have in your account, but as long as you pay for it at the end of the month. As most people receive once-a-month CLT workers, this cash advance in the form of credit was well accepted by workers in general, making credit cards as popular as they are today.
Invoice due and interest and penalties linked to your card usage
As we saw in the topic of how the card works… the invoice is the total amount of your purchases, which you have to pay at the end of the month to re-establish the credit limit. The due date of the invoice is at the customer’s discretion, so it does not get in the way of paying. I always recommend paying the invoice on time, so no interest is charged.
For cases where the invoice was not paid properly
Interest charges apply when the invoice is not completely paid off. In this case, the customer may choose to pay a portion of the bill, which is called the minimum amount, it is noteworthy that this minimum percentage is set by the financial institution of your card.
The remaining amount is subject to interest charges, the so-called revolving credit. Great care should be taken and the credit card used with planning not to fall into this situation as this line of credit involves charging the highest interest rates in the market. To get an idea, the annual interest rate of the revolving usually exceeds 400%, something amazing.
Revolving interest is not everything: suppose the customer delays the invoice or pays a value below the minimum set by the bank, in addition to the revolving interest he will bear a penalty of 2% and default interest of 1% per month on the value of the debt. The customer still runs the risk of having the card locked until the invoice is paid off.
Learn all about your card rates
Fees are charges made by banks, you have to pay them whenever you use certain services offered by them.
Your card rates are set by the MindSave Bank, check out the services:
Annuity: The annuity works as a rent, you must pay it once a year to continue using your card.
Withdrawal: Each time you withdraw with your credit card, fees are charged.
Sending a duplicate card: If you have had your card stolen, stolen or simply lost, you will have to pay fees to receive a duplicate.
Payments: Every time you use the card to make payments for invoices or slips, banks charge fees.
In addition, the card issuer has the right to charge fees for differentiated services requested by the customer.
Did you like the article? Understanding how a credit card works is essential to using it properly and saving a lot of money on your purchases. Contact us on social networks and share them to help your friends keep track of their finances.