How do credit cards work?

We have all ever had a credit card or wanted to start using one. And it is natural because credit cards are financing instruments that offer us benefits such as flexibility in payments and immediate access to cash.

Credit cards are financing instruments that offer us benefits such as flexibility in payments and immediate access to cash.

Having a credit card involves several expenses and knowing them will help you use it in a more responsible way.
Nowadays “Plastic money”, as it is also known, is welcome in most commercial establishments of all categories: hotels, restaurants, travel agencies, among others, so shopping became an experience without limits and possible for everyone.

This credit tool is an agreement between a financial institution (bank or other type of company) and the borrower (the person who owns the loan, that is you), through which a quota of money is made available for you to use through of a credit card, whose subsequent monthly payment is subject to the expenses you make and the amount of installments to which the purchase is deferred.

Know some costs and conditions of your Credit Card:

Handling fee

It is a charge that is made monthly or quarterly to the client for having the card and accessing all its benefits. If you want to know more about this topic, go to the website of the Financial Superintendency www.superfinanciera.gov.co where you will find comparative tables of the main costs charged by credit institutions in savings accounts and Credit Cards.

Bank fees

They are all those charges for the operations that are carried out when making use of the wide range of products and services that the bank provides. They can range from inquiries of financial movements, use the audio line, and everything related to withdrawing and transferring money by any means of the bank. It is important to compare the costs of financial institutions since not all charge for the same concepts, nor do they have the same rates.

Cash advance

It is obtaining cash using your Credit Card, the amount of which is charged to your card. Banks charge a commission for this operation depending on the channel through which it is carried out (ATM, office, internet or other). Most banks automatically defer the advance and the interest rate may differ from other transactions.

Protection – Insurability

Credit Cards and their franchises offer insurance to protect and give peace of mind to the client and his family in the event of death, permanent total disability, unemployment without just cause, victim of qualified theft and / or forced use of the credit card, among others. . For some of these insurances you must pay a fixed monthly value, but there are others that are included with the card and only by using it you already have access to them.

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