Credit cards have become the preferred means of payment when making purchases, however, their proper use continues to be ignored both when making transactions and when making your payment. Many people tend to think that the credit card is an extension of their income and what they do not perceive is that by using it they are really increasing their liabilities.
Do we know our duties as users?
But, really, do we know what a credit card is? Do we know our duties as users? Do we identify its main elements? Are we using it properly or are we doing our transactions blindly?
Let’s start by clarifying the definition of credit card.
A credit card is nothing other than a means of payment through which we acquire goods or services that we can cancel in the future. In other words, credit cards allow us to give ourselves the “love” we love so much without having to postpone it and wait to raise enough money to get it.
But it is precisely there where we get confused!
The excitement of the purchase works like a veil, making us forget about having incurred a loan that will generate interest and therefore increase the value of the purchase.
Knowing the main elements of credit cards, which will be mentioned below, will allow us to have an approach to their true functioning:
It is the cost that we must assume to use the credit card. It is an additional value that is calculated each month on the balance of the card. For this reason, the greater the number of deferred fees, the more months we will pay off the debt and the more interest we will have to pay.
- Minimum payment or fee:
It is known as the smallest amount to be paid monthly to a financial institution for the debt acquired through a credit card.
It is the maximum amount of money that can be spent with the credit card.
It represents the money owed to the bank after making the corresponding monthly payments.
- Cutoff date:
It is a date that the bank sets each month to calculate the debt that will appear on the statement. This calculation will be based on the purchases made during this period, to this consumption the previous balances will be added and thus the interest and the minimum payment will be calculated.
Some credit cards have additional benefits
Such as international coverage, assistance and insurance, discounts on purchases, among others. Our task is to inquire about these advantages in our financial institution to make better use of this means of payment and to compensate in some way for the high interest that they usually charge us.