What is a credit card and how does it work

Credit cards are a way to pay for goods and services and can be a convenient way to borrow money from the bank. Many financial institutions, such as Scotiabank Colpatria, issue credit cards by partnering with companies such as Mastercard®, Visa®, and American Express®.
One of the main advantages is that they can be used to help you manage short-term cash flow by allowing you to make purchases without using your own money. With a credit card, you can use the credit granted by the bank for your purchases, and later you will make the corresponding payments to the bank directly.

How does a Credit Card work?

credit card is a convenient way to borrow money to pay for things. You don't need to carry cash and you can use it to pay online or in person. You can even use it to pay for things abroad. There are other advantages to having a credit card - most offer benefits such as accumulation of points, discounts at specific stores, travel insurance, purchase protection, and a fraud protection guarantee. A credit card also allows you to withdraw cash (also known as a cash advance or cash withdrawal) from an ATM.

Basic elements of operation

The following concepts are common in the operation of your Credit Card
  1. Fees: It is the value that the bank calculates to determine the minimum monthly amount that you must pay depending on the movement and purchases you make with your card.
  2. Interest: It is an additional value that varies according to the product you have with the bank. To know the updated values ​​of the interest rates of each product.
  3. Quota: It is the maximum limit granted by the bank so that you can spend with your card
  4. Balance: It is the money you owe to the bank after making your monthly interest payments, minimum installment or capital payment

Credit limit

When you receive a credit card you will be assigned a credit limit. This is the total amount of money that you will have available to spend using your card. It is recommended that you always leave a space available to cover any interest that may apply.
The details of all the transactions you make will be displayed on your statement along with:
  • The minimum amount that you must pay according to the purchases you have made
  • The date by which at least the minimum payment must be received
If the minimum balance is not paid in full each month, you will be charged interest on the amount remaining in your account.

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