If you already have a credit card or plan to purchase one, here are the most important points you should know about credit cards to keep them at bay and not get into debt.
The CAT [Total Annual Cost]
According to the Bank in Mexico, “it is an indicator of the total financing cost applicable to all types of credit with which it is possible to compare the financial cost between credits even if they are of different terms or periodicities and even of different products” , that is to say you acquire a card with a fund of 10 thousand pesos and the CAT is 40%, approximately in that year you will have to pay 14 thousand pesos. Take into account that the CAT can be up to 113% depending on the financial institution.
Credit card limit
The banking institution is obliged to tell you what the credit card limit is, and you as a person who will use it, to remember how much you have available. Do not expose yourself to the shame of being told in a store the dreaded phrase of “your card does not happen” … or when the statement arrives read: “overdrawn card”. Remember, your plastic is not an additional income, it is another way to dispose of YOUR money.
Minimum to pay card
It is the minimum amount to keep your credit in force and does not generate a negative credit history (which will then be reflected in the bureau). “When you only cover the minimum payment, the actual amount that goes to the payment to the capital or to the payment of the debt is small since before it is necessary to cover the concepts that I already mentioned to you (interests, commissions and VAT ). For this reason it is important that you pay more than the minimum so that you manage to reduce your debt (capital payments) monthly considerably and do not feel that it is endless. “(1)
Your cutoff date
It is when the bank says, “So far I will review how much you have spent and I will put it on your next receipt”, this cycle is 30 days, but there is a trap that if you know how to use it, you Can you have it in your favor: If you buy a television six thousand pesos on the cutoff date, then you have a grace period to pay, for another 20 days, so you can actually finance your purchases for up to 50 days.
It is important that you remember this date better than birthdays or birthdays, since if you do not pay (remember, more than the minimum) by then, the bank will charge you more interest, so you must schedule yourself in payments and know all the Alternatives you have to make deposits, with technology now you can do it from the comfort of your cell phone. Do not forget it.
Interest, commissions and annuities
The CAT is a calculation, these are real and can exceed that approximate. Interest may be because you only pay the minimum or because you did not pay on the established date. The commissions are for the use of the card, the annuity is fixed and may appear on your receipt in several monthly installments, so find out how much each is and what they are charging you. investigate that other types of cartoons involve your credit card to take them into account.
Insurance and other services
Several banking institutions at the time you sign the contract to get your card, they also give you medical insurance, so you read it on the statement and you don’t know when you hired it. Find out about the additional services they provide you with your credit card and what its cost is. Analyze if you really need them.
If you are a person who likes to travel, it is best to make sure your card is international.
Rewards, points and promotions
Most banking institutions offer you accumulative points or promotions for timely payment; you verify the bases and take advantage of them; You can even win prizes.
Save tickets or voucher
This is valid as a tip, because when your statement arrives, you can compare what you bought and how much it costs you, with what really comes on your receipt, if there is an anomaly it will be easier to make a claim.
Remember that your credit card is not additional cash, it is only a different mechanism to dispose of your money.
Do you know any other tip? Share it with us in a comment.