Credit cards are the most popular type of financial product that exists. But that does not mean that all people know how to put it to good use and make the most of it.
Throughout this article we will explain everything about what a credit card is and how it works. This information will help you know how to control them and not let your bills negatively affect your financial stability.
What is a credit card?
A credit card is defined as a plastic material document issued by a bank or specialized institution in the name of a person, who can use it to make purchases without having to pay in cash and can also take the payment of the products to periods futures.
How does a credit card work?
To know how a credit card works, the first thing to understand is that they are a financial product like any other loan. With them you can make the purchases you want, but it will be the bank or credit company that finances the purchase.
Then you will have to return the money; You can do it in cash, or through comfortable installments over a period of time previously stipulated. For that service the financial institution earns a small commission due to the interest generated by your debt.
This type of financial product is revolving, which means that you return to the same amount of money every time you finish paying it. That allows customers to reuse them without problems.
What is a credit card for?
Credit cards are used to pay for products and services more conveniently. In general they serve to make payments without spending your own money (in cash or debit card) immediately, but that of the financial entity is used.
How to use a credit card?
If you want to know how to use a credit card responsibly and get the most out of it, apply the following tips:
Use it with awareness
Control your expenses when using a credit card because the money borrowed is not infinite, and you always have to return it at the end.
Pay on time
Always pay your consumer bills on time so you can enjoy an impeccable credit history.
Do not pay only the minimum
Try not to pay only the minimum, as this will lengthen the debt too much and you will not be able to enjoy your total revolving credit.
Do not pass the credit limit
Although in many cases financial institutions offer an extra limit, it is almost always subject to higher interest.
Compare to find the best card
Be sure to hire the best credit card in the market. A credit card comparator will be useful to apply this advice.
How to get a credit card?
- First step :
Compare options and find a transparent and secure financial institution.
- Second step :
Make the request for your card complying with all the requirements that are requested without using false information.
- Third step :
Prove that you have constant income that will allow you to pay the credit card fees.
- Fourth step :
Try not to have financial debts that are staining your credit history.
- Fifth step :
Receive your new credit card at your address or go find it at the issuer’s office.
What is the best credit card?
The best credit card is the one that meets the following characteristics:
- Low interest rate :
They have competitive interest rates that do not affect your pocket too much.
- Possibility of increasing credit limit :
It has progressive increases in the total amount of revolving credit or the credit limit.
- Widely accepted :
It allows you to make purchases in almost all physical stores, online and also make withdrawals at ATMs or transfers to third parties.
- Discounts :
It offers other benefits such as discounts on specific products or services, and even free purchases or access to events, etc.
- Suitable for emergencies :
It is backed with extra credit so you can pay high amounts in emergencies.
How to pay the credit card?
Credit cards can be paid today through the bank’s ticket offices, using an ATM, or through the web portal or app of the financial institution. Payments are usually made in the following ways:
- Minimum Payment :
It usually represents 5% or 10% of the total debt of the card, is paid once a month, and brings with it a small commission for interest.
- Regular payments :
It consists of paying more than the minimum once a month to cancel the debt faster. There may also be several payments during the month if the financial entity you hired allows it.
- Cash payment :
It is when you pay the total balance of the debt at once to avoid more interest surcharges. This form of payment is recommended when extra credit is used.