Credit, Debit & Billing: All Cards in Your Wallet
It is likely that plastic pay (cards) should replace cash in kind once in the next few years. But today, while debit cards and prepaid cards often share some of your older brother’s resources, credit cards, each type of card is separate and distinct, its goals are specific. To find out which one is right for you, keep reading.
Real credit cards have a defined spending limit between (R $ 500, R $ 2,500, R $ 25,000, R $ 35,000, etc.). The limit is based on the credit score, income and score of the cardholder’s current position. They also allow consumers to borrow money from the card, and payment is made once a month (which is the payment of the monthly bill).
In general, as you spend more money on the card, your credit limit increases. However, if you are constantly making late payments of your monthly bills or fail to make payments, your limit will be reduced (or your credit will be cut), and the interest rate charged with a fine and correction month after month on the balance due.
While many non-annuity credit cards are currently available, interest rates can reach 233.8% per annum, so shop carefully and know how to select your new card. If you have had trouble managing your credit and can no longer get a conventional credit card from banks and financiers, some credit card companies offer prepaid cards, secured cards and virtual cards.
With these cards, you deposit money into the card issuer – usually $ 100 to $ 1000 or more – and then you can get a credit card with a spending limit equal to the amount of money deposited. In secured cards, the deposit earns interest and is usually repayable after establishing a satisfactory credit history.
When you think of credit cards, then think about American Express, Diners Club among others. Unlike credit cards, debit cards do not have a monthly spending limit, the discount is made directly from the bank account. But on the prepaid card, you can make an unlimited number of purchases with this type of card, but you need to have enough balance to afford the cost of your purchases.
Prepaid cards or (charge cards) usually charge an additional fee and apply penalties to discourage you from keeping the balance unused. Like credit cards, some cards charge a monthly fee that can range from $ 4 to $ 9 or more.
But regardless of fees, for many consumers, the cost of having a charge card is often significantly less than the cost of having a joint credit card due to interest-related debt that can be accrued for misuse.
Debit cards work as plastic checks. When you make a purchase with a debit card, the purchase payment is deducted directly from your bank account. If your account does not have sufficient funds to cover expenses, payment will be refused. Online debit cards work like credit cards, requiring you to provide the relevant information.
But offline, your card works like an ATM card, requiring you to enter a personal identification number (PIN) to start transferring funds from your bank account to the merchant’s bank account. After a few minutes or days later, the funds to cover the purchase are transferred from your bank to the merchant’s bank.
Reduce day-to-day costs, expenses and expenses
If you want to reduce your spending and avoid the desire to buy things that you can not afford, debit cards is your best choice. There are no monthly invoices, no interest rates (unless you’ve linked to the account overdraft), and usually no fee is charged to get a debit card from your local bank.
Visa and MasterCard are currently the largest debit card issuers, so merchants who accept Visa and MasterCard credit cards also accept debit cards. It is worth mentioning that debit cards are subject to fraud as well as credit cards.
Conclusion on credit, debit and collection cards
Putting a plastic (card) in your wallet is the most convenient way to avoid carrying cash, yet still maintain the ability to make purchases and make payments in trade. And for those who participate in various programs and the benefits offered by credit cards, you can earn many airline miles or a variety of other rewards by purchasing items that you would have bought anyway.
From the financial point of view, debit and prepaid cards (collection cards) are structured in a uniform way and therefore represent a small cost and risk to your financial well-being. Their internal controls discourage or prohibit unbalanced maintenance, so the temptation to indiscriminately shop is minimized.
Misuse of credit cards
Credit cards, on the other hand, constantly serve as instruments of financial ruin for many compulsive buyers. Interest rates are limited to the obscene level (10% to 17% a month), and when the monthly payments are stretched the charges applied can destroy the finances of any person.
To avoid the various pitfalls that accompany credit card use, be aware that your habits are controlled, and keep in mind that by making the monthly payment broken does not mean that you have the freedom to shop: it simply means that you can buy, but can not afford.