Credit Card

The theoretical convenience of the credit card has always amazed me.

Today I will analyze and demonstrate to you why I think so. I’ve already talked about creditworthiness and how it affects things here in Europe as well.

Payments and withdrawals are debited to the holder’s current account at a later time. Generally on the 15th of the month following the day of the transaction. Credit cards have a monthly spending limit (ceiling) which varies according to the type (some cards may have no limit). It works like a credit line made available by the bank.

Benefits:

  • The card offers the possibility of making purchases or making payments even when there is no liquidity on the current account. This works because the bank postpone the debt on the current account.
  • It allows us to access services that require subsequent payments based on the use of the service (for example, rental car).

Disadvantages:

  • One of the merits of the credit card, i.e. the deferred debit, can prove to be a double-edged sword. If you do not keep your expenses under control, you risk getting into debt, affecting your creditworthiness.
  • The fees for ATM withdrawals are higher as you are not withdrawing from an account, but the bank anticipate cash for you.
  • Card handling costs are often higher.

Reimbursement of expenses incurred can take place mainly in 2 ways:

  • On balance. It is the most common and cheapest method. provides for the repayment of the sums in a single solution and after a set number of days (usually within 30 days of the transaction). Usually there are no interests applied;
  • In installments. Allows you to repay the balance accumulated over the course of the month in constant monthly installments. This solution is less economical as the bank will apply interest. Interests on Credit card are very high.

Why I like Credit Card?

If the advantages seem few to you in relation to the disadvantages, it is because I have not told you about one last advantage. Reward incentives.
Many credit cards give rewards if you use them. Often it is nothing special, but among the prizes there are insurance and assistance in the case of travel.
Knowing how much health insurance costs, it is a good incentive to have a card.

In practice, using it as one would commonly do instead of a classic card often also eliminates the management costs of the card. You should only pay attention to the balance to be repaid in the following month, but on the other hand if you have to move you are protected and insured. Not bad, right?


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