The credit card is defined as a means of financing granted by a financial institution, it is a form of money loaned with a monthly interest percentage .
With it you can make purchases of goods and services without cash, in fact, the financial institution is the one that liquidates the amount of these purchases to the business. That is why it feels so good to sign … even if it is no longer the same when paying!
This product mostly has a cost per annuity , which varies according to the benefits of the card and the institution that issues it.
Let’s say you pay in exchange for enjoying the 12 months of the credit line , which is nothing other than the specific amount of money that the bank or financial institution is willing to lend you according to the analysis it makes of your profile.
Every time you buy something with your card, you use your credit line, as you pay it back, you can have the original amount that was loaned to you again. Imagine that you have a credit line of 3,000 pesos and you buy a jacket of 1,000 pesos, so your card will only have 2,000 pesos available to make other purchases. As soon as you pay that purchase, you will recover all your creditworthiness (the 3,000 pesos) and, if you follow that payment habit, the bank will eventually reward you by increasing your credit line.
Good payers are welcome everywhere, bad payers may not even be wanted at home, ha ha.
Managing your credit card well is an excellent cover letter for when you apply for a larger loan and meet more ambitious goals at different stages of your life, such as buying a car or a house.
But, waters! Today you must keep the idea that your credit card is not synonymous with extra money but a loan that, on a certain date, you will have to pay. Hence the importance of knowing your ability to pay , that is, the amount of money that you can have each month (regardless of your fixed expenses, such as rent, food and transport or tuition if you are a parent or mother) to pay your debts without going out of your budget.