Did you fall into the credit card business? – The financial

You go to the supermarket and you find yourself promoting a card; they propose to grant you one in the correspondence of your account statements; They dial you on the phone offering them; you go online and you get advertising about them. Why? Simple, it is a good business for banks, capturing below 5 percent and charging between 30 and 60 percent interest.

To justify this differential, they argue that they have the highest delinquency rate, reaching around 15 percent. Ironically, there are institutions that have a presence at low socio-economic levels, with the highest costs.

Some banks even stop requesting the annuity or it is minimal, because that allows them to add clients and their profit is in the rates they charge.

I understand that in the face of health contingency problems, cards have been used to cover daily expenses, if there was no contingency fund, but that is already changing and it is also prudent to check how much is the leverage through them .

Banks want to compensate for the market that fell during the pandemic. Credit card transactions declined in the early days of COVID, when travel was prohibited and restaurants were closed.

For our part, in the Christmas season, emotionality leads to use it more frequently and by the temptation to “take advantage” of promotions. Be careful not to fall into the illusion of months without interest, because even if it does not carry a financing cost, if there is no resource for the full payment of the balance, the debt will rise continuously.

Worse, if we make a cash disposition. The commission ranges from 5 to 10 percent, depending on the bank, in addition to the collection of the respective interest if you do not fully liquidate it at court. It is valid if it is a rush in an emergency, but for some this mechanism is common.

The cards should be seen as an instrument that, well used, is an excellent ally for personal finances. To do this, I invite you to read this column next Thursday, where I will propose a new paradigm of use.

How many cards do you handle? Comment me on Instagram: @ atovar.castro

Twitter: @albertotovarc

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