Credit cards, plastic money
Today customers have a multitude of ways to make payments. The traditional custom of putting your hand in your pocket and taking out some coins and bills is becoming less common, emerging new payment techniques such as payment through the mobile phone. Although, there is a payment device that gets us out of a lot of trouble and that is more than just a form of payment: credit cards . Credit cards are not new, even though their use has become popular in the last twenty years. The first time someone paid for their purchase with a credit card was at the beginning of the 20th century. At that time, a director of the Chase National Bank (now JP Morgan Chase) put into practice a revolutionary idea: to associate the customer's account with a card with which they could make payments in the usual establishments. The crisis of 1929 delayed its apogee, which in the United States took place in the 1940s.
Credit cards and debit cards
Stories aside, credit and debit cards have conquered our wallets and allow us to go out to La Roane without a penny in our pocket and to be able to make all kinds of purchases, and even make use of small credits. Although not all cards have this condition, we must differentiate between credit cards and debit or charge cards.
- Credit cards: Credit cards make available to the customer an amount of money agreed with the bank. The user makes purchases at the end of the month or within the term established with the agency, the entire payment is made. If the client exceeds the limit set in his pre-granted “microcredit” he is penalized with a series of interests.
- Debit cards: Debit cards are linked to a bank account and their balance is limited to the amount available in the account. Every time a purchase is made, the amount is deducted from the account immediately, with no option to spend more than what you have.
Credit cards and microcredits
With this difference, it can be established that credit cards are similar to a pre-granted mini-credit available to the client, subject to a short-term payment plan and for a limited amount; something similar to the microloans that we grant in CréditoSí . In a mini-credit, the money is requested with an approximate return period of one month, preferably coinciding with the payroll collection day. With credit cards you also have a small amount of money that has to be returned on the day set by the bank. In both cases, the loan is subject to fees, which are based on each entity and to which late payment interest can be added. The disadvantage of the card is that it has the risk that its mere existence sometimes supposes an excess of confidence that entails an abusive use that cannot be dealt with later. At that time come the dreaded fees that far exceed the cost of using a microloan. On the contrary, a microloan is requested at the time of an emergency and is amortized in the term that the client wishes. It is also true that in the event of a default there are significant late payment costs. Therefore, a controlled use of them must be made.
Common fees for credit cards
Of course this is a business, the money business, and banks and entities that offer credit cards have profits with this payment instrument. In Spain, regulations establish the commission limit that entities can charge businesses for each purchase, without affecting what the customer pays. If a business overcharges the price of an item by paying it with a card, it is causing comparative injury and can be sanctioned. Among the usual commissions of credit cards are: nominal interest for exceeding the limit, late payment interest, deferred payment interest, commission for total or partial amortization, issuance fee, maintenance fee, renewal fee, commissions for disposition of cash in own ATMs and those of other entities, commission for disposing of cash abroad, commission for balance inquiry activities in ATMs outside the entity, commission for currency exchange, commission for use on mobile devices ... and the list continues with similar charges. However, not all entities apply the same concepts.
Ranking of the best credit cards
Taking into account the availability of credit and the commissions charged by the different entities, it is possible to establish which are the best credit cards available.
- ING Direct Gold Visa: it is the best valued. It has no registration or renewal commission. It is subject to having an account with the entity, although they return 3% on certain purchases. It does have commissions for managing ATMs that are not owned by the bank.
- Barclays Visa: there is no cost for registration or renewal. The card includes travel, theft and similar insurance. The minimum payment is 7.5 euros, having commissions for disposing of cash.
- Bancopopular-e card: the electronic version of Banco Popular has another of the most valued cards. It is similar to its podium companions, with a credit limit of 10,000 euros and commissions of up to 5%.
From this podium, the offer becomes endless, differentiating the cards in their maintenance fees and cash disposition, as well as their interests. The APR for credit cards is approximately 25%. However, if you need a small amount of money, before pulling your credit card, check the option of a Payroll Advance. With microloans you know from the beginning how much you pay and the repayment date, without commissions or fine print, just hard cash, without complications.