The minimum consumption, the interests of the fractioned payment or the commissions are avoidable if we have the appropriate card. Credit cards, as well as debit cards, have become one of the most common means of payment of our time, replacing cash little by little. But are we aware of how credit cards really work? Next, five traps in which we should not fall:
1. Free, but with minimum consumption
Most banks promote their cards by mentioning that they are exempt from issuance and renewal fees, that is, they are free. While it is true that the free issue is quite common, many banks require that their customers make a minimum annual consumption with the 'plastic' to avoid the renewal commission. So before hiring a credit card that comes with the slogan 'free', we will corroborate that it is really free and that it has no hidden conditions. The ING Direct credit card, for example, in addition to having one of the lowest APRs in the market, is always free.
2. Cards with deferred payment "from the factory"
As we all know, credit cards admit different types of payment: either you can pay everything at the end of the month; or you can defer payment of purchases, fractioning the amount. The first modality is exempt from interest, that is, what is spent is paid. On the other hand, postponing purchases entails the payment of interest, which can reach almost 30% APR. The problem does not lie in the extra expense involved in financing a purchase, after all, they are lending us money and that has a cost, but in not knowing what form of payment we have on the valid credit card number.
We have to find out what mode of payment our card incorporates once it has been received and, if it is not the one we want, change it before passing the card through a data phone. This way we will avoid believing that, for example, we are paying for our purchases without interest when in fact we are financing them all.
3. Refund of part of purchases
It is one of the typical advantages most used by credit institutions to attract customers. You can find cards that return up to 5% of the number of purchases on snurl, however, when reading the fine print we will realize that what a great advantage seemed; it is not so much since most banks usually apply for the refund only on deferred purchases.
4. Taking money costs money
Unlike what happens with debit cards, withdraw cash from an ATM with a credit card is not free, except for a few exceptions, that allows you to get free money on debit. The commission that is applied to the disposed money is usually between 4 and 5% with a minimum of about 3 dollars. To the commission must be added the interest applied to the borrowed money. So be careful with withdrawing cash with a credit card, as it may end up being very expensive.
Despite the above, there are many advantages of credit cards. In the end, the problem is usually reduced to not knowing the product that we really carry in the portfolio. Well studied, can be a great ally, especially in situations where we lack liquidity or have to spend a significant amount of money.