- Credit card is an electronic form of payment. It emerged in the United States in the 1920s and was only offered to clients selected for their loyalty to the financial institution.
- But it was in 1950 when Frank MacNamara was in a restaurant in New York and realized he had forgotten his money and his checkbook to pay the bill. Then he had the idea of creating a card that contained the owner’s name as collateral, and that after a while the cardholder could pay off the debt.
- Who provides a credit card is actually financing the cardholder and also the supplier of the merchandise that is exchanging hands. But do not be fooled into thinking that by not having to pay the bill immediately it will be easier.
- Having credit cards has its pros and cons, so it is important to stay tuned in to your financial control worksheet.
Pros of credit cards
- this is an pro that attracts many adepts to the cards, for the convenience and security of not having to carry money in the wallet.
- the credit card, as we saw previously, was designed for emergency or unforeseen moments, in which one does not have the money to make a payment that was not programmed.
Deadline for payment
- is an interesting pro when hiring a bank’s credit service because it pays your account and waits in some cases up to 40 days to receive the money back. Or it even offers the advantage of splitting your purchase in several times.
- is a good advantage for people traveling to other countries, because it avoids the exchange rate and possible losses.
Benefits and awards
- competition is very healthy for the consumer as it provides funders with a number of benefits to attract more customers like rebates, bonuses and miles accumulated that can be reversed in cash, purchases and airline tickets.
- the credit card also offers the advantage that once approved will not be required many other guarantees as guarantor, promissory among others.
Cons of Credit Cards
- These are linked more directly to the behavior of the cardholders than to what it offers as risk. For it is in the decision of the one who holds it, the control so that it does not become a nightmare. So beware:
- You can easily lose track of how much you spent (the invisibility of money). Small expenses add up, and without delay they become a huge amount, hard to pay. In a consumer society, where what counts is the here and now , the credit card in the hands, is really a big risk.
- To not think that credit card means spending without limits, remember that you will have to pay off your debt either on time or once. Do not forget that 30 or 40 days will pass and the account must be cleared.
- Schedule yourself to pay the bill in full. The alternative of paying the minimum and accumulating the rest for the next month can be a great trap, do not be fooled into thinking that pushing for another 30 days will be a good choice, interest in this case is very high.
- The idea of Frank MacNamara was a good departure at the time, and today is the solution for many. But it can also be the destruction and fall of many others if they are not careful to maintain proper financial control.
- Fraud: in the physical and virtual world. There are countless stories we hear about how credit cards are cloned? It’s not always easy to prove that you have nothing to do with it, as fraud methods are becoming more and more sophisticated.