In this section, Mr. B helps you deal with the complex world of credit cards, and their relationship with credit ratings.
In very simple terms we can tackle the problem of choosing a credit card by asking a simple question: if I cannot pay off the debt generated, will I be able to pay interest on my debts?
This is one of the fundamental questions we must ask ourselves when choosing a credit card .
If you have chosen a credit card for the balance , you will pay the charges made at the end of each month and there will be no calculated interest on the debt. In that case, it is worth having a credit card with a bonus points and rewards system. These cards give the buyer every time you use reward points, cash or air miles. However, these types of cards have higher interest rates, high enough to take away the value of the prizes they earn.
If you have chosen an installment credit card , and you are unable to pay the debt every month, then Mr B advises you to observe the contract well and to minimize interest payments: in this case you should choose an installment credit card which has a low interest rate.
Let us always remember that a credit card is issued by a bank. The bank determines the interest rate, commissions and benefits, so it is important to find a bank that offers a card that satisfies you based on all the parameters.
The credit card is then distributed over two networks , such as Visa or MasterCard. The distribution network does not actually affect the card, with the exception of minor advantages such as travel accident insurance, etc. In general, credit card distribution networks are not as important as the institution (bank or financial institution) that issues them.
Credit card companies make money in three ways:
First of all, you don’t have to worry about the first point because interchange fees are a problem for merchants . Instead, the credit card holder should be very concerned about the interests and commissions.
If you have a credit card with points and rewards, remember well that nobody gives you anything … and those points are not given generously. Most people think a credit card will get you more into rewards than paid interest, but this is a rare case.
Credit card commissions and benefits are always defined with what is known as a Schumer box ( Schumer box ): a black and white box that gives you the most important information on the card.
Here is a logical outline of how to read the Schumer box (Schumer box).
Keep reading our guide, Mr B will explain to you the advantages and disadvantages of credit cards on the market and how to choose a credit card.