Tech
Entertainment
U.S. & World
Tech
Entertainment
U.S. & World

Learn How Much Banks Charge You for the Use of Your Credit Card

By on April 21, 2013

The excessive use of virtual money could make you fall into a dangerous routine, which few recover, especially if they are in the form of revolving credit.

Learn How Much Banks Charge You for the Use of Your Credit Card

If you are of those who used credit card to throw gasoline on a daily basis, buy bread, leaving spree with friends the weekend, pay for services or cover the minimum expenses of the House, be very careful.

The excessive use of virtual money could make you fall into a dangerous labyrinth, which few recover and manage to go well unemployed, especially if they are in the form of revolving credit.

Before using any major credit card, you should know how much we have in our monthly budget and how much really is what we are going to pay to make ends meet.

FLUCTUATING RATES

Here is where the user must stop and pay more attention. The first thing is to know what you should be more: the form of revolving credit or the means of payment in installments.

In that case, the annual equivalent rate maximum in the form of purchase revolving in the financial system fluctuating between 107,79% and 117%, while the minimum goes from 73.4% to 71,61%.

For the available cash of a classic card revolving mode, the Annual effective rate fluctuates from 92,77% to 188,16%. Finally, for credit cards ‘retail consumption in the Annual effective rate fee goes from 78,88% to 132,07%.

What to choose? It depends much on the income of the user. If a person has a fixed income you can plan to pay in installments, but if you have a receipt for fees and revenues are variable monthly, revolving mode suits you most.

MINIMUM PAYMENT

What happens is that banks always pose a minimum payment and a total payment in billing statements to its customers. However, the first is not helpful to the user, but to the Bank, because the debt, even if it is set to a period of 12 months, with the minimum payment can reach 83 or 90 months.

When you make a minimum payment, which is less than the total, is canceling out only a fraction of the capital and a fraction of the interests, commissions and charges applicable. The rest of the debt will be passed to the next reporting period and will continue amortizing scarce amounts. Therefore, the debts become unplayable.

In this regard, the Superintendence of banking, and  insurance does not recommend the minimum payment to cancel the debt of credit card. It is preferable to pay the total balance of the month, or save, in any case, to make the purchase in cash, not credit.

Another important point is that the debt should not exceed 30% of their income, so offer you a cheap credit. And not think you withdraw money by credit card, the interest is very high.

Comments

comments