You never had a credit card? And you are seduced by the idea of buying with a plastic, before deciding it is better that you know how credit cards work, as it can be a good idea if you are a good expense manager and then you will use it correctly.
What you should know about how credit cards work
If you know how credit cards work It can be a good option for you to do your shopping in a comfortable way. In principle, it is a means of payment issued by banks so that you can make purchases in the largest number of physical and virtual stores in the world, but follow these recommendations:
- You must pay attention because the funds that you will be using do not belong to your income, therefore that money that you use with your card does not belong to you and therefore you will be acquiring a debt, so you can consider that it could be a loan.
- This is the main difference with a debit card, because in this case the purchases you make are debited from the funds you have on the card and those funds do belong to you because they correspond to your income.
How do I get a credit card
To obtain a credit card you must go to a bank that may or may not have offered you a pre-approved one, you will proceed as follows:
- Then when applying for your credit card, the bank will evaluate various concepts about your ability to pay, your income and your credit history, as key points for approval.
- If your request was approved, the bank will establish a line of credit that will indicate the maximum amount at your disposal so that you can make your purchases.
- If the credit card application was approved and you have accepted the conditions, the bank will give you a plastic with the bank’s logo, your first and last name, the identification number of the card, its expiration date and your security code, which is unique and is important for you to close your purchases.
- Once you receive your credit card, you must activate it by following the instructions that the bank will give you and you will sign it on the back so that no one uses it without your authorization and it will be ready for you to pay and make your purchases.
How to use the credit card
Nowadays, most commercial premises have the necessary tool to process credit card payments, but it is always better that before deciding on your purchase, ask if the store accepts card payments and you will be able to buy with peace of mind.
- If you make the purchase in a physical store, they will ask you to present your credit card so that the tool that processes payments can read it, then hand it in, then they will return it to you.
- Because generally stores need to verify that your identity is the same as the card indicates, you must carry with you and present your identity document.
- When the purchase is processed, you will sign a voucher and they will give you a proof of the purchase you made, which you must keep until you receive the summary of your account.
- If you make a purchase online with a credit card, you will not need your identity document, they will only ask for your card details, your name, the card number, its expiration date and the security code.
- Although it may seem simple, you must take precautions, because being an online purchase you must control that it is a trustworthy website that safely processes payments with encrypted data and also if the purchase is not made at home with your own computer or tablet, remember to log out when you finish.
- Keep in mind that the value of each purchase you make with your card is added and deducted from your balance and that value must be paid when the summary of your account reaches you and if the balance you have available runs out you will not be able to return to use the card until you regularize your situation by paying what you owe.
- Most stores will offer you promotions so that you can make purchases in installments and make monthly payments. Then you must control that this form of payment does not have interest, since if they charge you interest for installment payments, your debt will grow.
- Paying with plastic benefits you in a way because you can finance your purchases, since you do not need to pay cash at the time you make your purchase.
- Your card will have a cut-off date, which you must take into account in order not to pay additional charges for late payment.
- The cut-off date will always be the same every month, it is the date on which a period closes and a new period opens that will end on said cut-off date, in which you will be able to see all the expenses you made in a month and the total value you owe to the bank.
- You will have a payment deadline that is calculated 20 days from the cut-off date.
- If you make your purchases at the beginning of the new period, you will settle that payment after 50 days because the 30 days between one period and another are calculated and 20 days from the cut-off date to the payment deadline, on the contrary if you buy them You do before the cut-off date, that is, when the period is about to end, the time for you to make the payment will be less.
- As for the payment of your cats, it is better that you settle it before the payment deadline so that it can be processed in advance and you will not have additional charges if you forget.
- The summary of your account will arrive at your address when the cut-off date ends and you can also check your status in homebanking or in your bank’s app.
- In the summary of your account, you will see a breakdown of the purchases you made in the month with their value, if you made them in one payment or installment and the fee you are paying for those installment purchases, for example if you made a purchase in 6 payments and you are paid the first installment you will see it reflected as 1/6, the next as 2/6 until the end when it will be reflected as 6/6 and you will have finished paying for your product that you bought in 6 installments.
- Your payment deadline and the cut-off date can be read in your account statement.
How credit cards work in the United States
If you travel to the United States you will need to know how credit cards work both to make payments or withdrawals of money. If you already have a credit card from your country, you should contact your bank to explain if it will work at ATMs in the United States.
But if your idea is to stay longer in the United States, it is best to open an American account and apply for a card, because in the United States you can use a credit card everywhere, as you will see their logos on the doors of commercial premises and You will use the PIN code to withdraw money from the ATM with commissions that are high if it is not the ATM of the same issuing bank.
On the other hand, although the credit cards that can be granted will not cost you, you must find out in several banks and also in order to obtain a credit card in the United States you will need to have a valid Social Security number.