We Help You Understand How a Credit Card Works | Payday Loans
Credit cards are financial products that have completely changed the way people manage their finances, becoming a fundamental tool for day to day. However, with the wide range of these plastics in the Mexican Republic, it is difficult to know which credit card is the most convenient.
In fact, according to a report , more than 50 percent of the owners do not take advantage of the promotions offered or use them very minimally. Therefore, before deciding on one, the most important thing is to know: How does a credit card work ?
Understand how a credit card works
In order to understand the operation of this kind of financial product, the first and foremost thing to do is to define them. The credit card is a financial tool, offered by banks that can be used as a method of payment in thousands of establishments that have a terminal for processing payments.
In this sense, although they are similar to debit cards, they differ in the fact that the money in the credit card, we have it regardless of whether we have it in the account or not. On the other hand, the debit card ends up being useless if we do not make a deposit of funds.
However, not everything is a paradise with credit cards, because once we pass through the terminal, make a withdrawal from an ATM or make a purchase online, the money paid must be paid back to the bank or institution that I have emitted the plastic. We can pay this amount in two ways:
- Be at the beginning of the next month to which we use the card, modality by which the card is paid without having to pay additional interest, or
- Deferred payment: This is the other modality that credit cards allow and that gives the user the opportunity to pay what is spent in installments, giving him more comfort and flexibility. However, this form of payment involves the payment of interest, which varies according to the bank.
Credit cards also have other characteristics, both positive and negative, to be taken into account. Normally, the use of credit cards includes a commission, a charge made by the institution issuing the plastic for the provision of the service. Among the most common, are:
- Administration fees
- Provision of credit in cash.
On the other hand, banks, to make attractive the offer of their credit cards, include benefits that end up being very useful to many people when they know how to take advantage of them, such as: discounts in establishments, cash back, points that can be redeem for plane tickets, etc.
What should I know before purchasing a credit card?
Now that it is already clear how a credit card works, the next step to take into account before acquiring a credit card is to make a good analysis, both the characteristics that make up the card and the personal ones, that is, the capacity of payment and the use that will be given. The latter are important, there are those who can only pay part of the borrowed money, to whom credit cards with lower interest are convenient. It’s all about making a good comparative analysis of the products that are to be acquired
For many, having a credit available at all times may seem like a problem, while for some it is even a nightmare, but it does not have to be. The main thing is to understand how a credit card works, the commitments involved in accepting them and finding the one that suits our consumption habits. We here at Bonsai Finance, can help you find a card that is in line with your needs and your financial situation.