Credit purchases are something of the most common, which is why the use of this type of card is increasingly widespread. But not all are the same, there are different types of credit cards that you have to know. Since, although they all allow us to have money that we do not have, not all do it in the same way. Choosing the one that best suits your habits is always the best option.
What is a credit card?
We already told you in a previous article what the differences were between a debit and credit card. The latter is a banking product that allows us to have capital. Either in cash or to make purchases, and that may be greater than our bank balance. It is nothing more than a loan of which we can take part or all of it, and pay in monthly installments. With an interest, or for the entire balance drawn down, without interest.
Types of credit cards
Credit cards can be classified in different ways, but the easiest to understand is this one that we have developed:
- Standard credit card : this type of card allows you to postpone purchases. Until the following month in its entirety, which does not accrue interest. If it is decided to divide the payment or withdraw cash with it, an interest is applied by the bank.
- Revolving or fractional payment card : While r evolving cards do not have a good reputation, they are not a bad product if used correctly. You can, like the standard, pay the purchase in full the following month without interest; or divide them into monthly payments. You will pay a percentage of the drawn balance or a fixed monthly amount. In both cases, interest is applied.
- Universal credit cards : each bank issues theirs under the name VISA or MasterCard generally. They can be used anywhere in the world without any problem, since these platforms are fully implemented.
- Private credit cards : the case of the famous American Express. These are requested directly from that entity and are associated with our bank account. Payment of purchases is made the following month and does not accrue interest; but the card has a variable annual cost.
Are credit cards interesting?
Without a doubt, it is a very convenient product to always have on hand. In Nigeria there are almost twice as many credit cards as there are debit cards. And in periods of crisis, its use shoots up. Thanks to the balance of credit cards, many families are better able to weather economic uncertainty. Especially when the problem generated by COVID-19 has triggered the use of card payments to the detriment of cash.
When choosing one of the different types of credit cards, we can contact our bank. They generally offer one when you become a client, and a variable balance is available depending on the credit history of the person requesting it. If we get one, it is advisable to read the contracting conditions carefully. Your annual cost, if you have it, and the interest generated by deferring payments.
Credit cards allow us to have a certain economic cushion at times. Likewise, its benefits go beyond being able to defer payments. Since some have a return in the form of cash on a percentage of purchases , they allow you to accumulate points to exchange for gifts; or they have interesting insurance when traveling or buying some products. Why not take advantage of the different types of credit cards?