The benefit of credit cards in general is that it facilitates one’s activities before and after making transactions online. But this statement is still general in nature, so it allows a person to have difficulty when understanding it. Therefore, read all the following education!
For people living in urban areas, having a credit card may be the right choice for financial transaction issues. With our various activities coupled with the practical value contained in it, making a credit card is needed.
But what sometimes fails to understand is that credit cards basically have a specific user segmentation target. Because if this service is owned by those who don’t really need a credit card, then the impact will be very bad. Not only does it trigger an extravagant lifestyle, the wrong use of a credit card can also cause problems such as being a victim of fraud.
Similarly, for those who are eligible to use a credit card, there are several important benefits that holders of these postpaid services must understand. But we have to find out in advance what a Credit Card is and how to make it.
About Credit Card
A Credit Card is a postpaid transaction tool issued by a banking company in physical form. When a person has it, then he can make any transaction according to his preferences. After that, the bank will pay it according to the nominal in the bill.
Furthermore, the credit card holder has the right to pay a certain amount of money based on a nominal bill to the bank concerned. parties Usually banks give payment rules to credit card owners at the beginning of the month.
The general idea as the rightful owner of a credit card is that a person will receive all transaction facilities that allow him to be more efficient in utilizing time when transacting. This is inseparable from its functionality that can be done online.
Types of Credit Cards According to Their Functions
When we look at it in terms of its function, the credit card itself is divided into several types, namely:
1. Check Warranty Card
This seems to be similar to a regular check tool but has an extraordinary benefit, namely for collateral when the owner wants to disburse his funds. One of the advantages is that you can function as a withdrawal transaction through an ATM machine.
2. Credit card
This credit card has benefits as a means of payment when the owner carries out buying and selling transactions for physical products to services. While the payment method can be made in the next month and globally or with an installment method with a certain tenor.
Generally, this nominal calculation will be calculated based on the billing balance: Time (tenor) + interest rate for the card.
3. Cash Card
This is a type of credit card that has the benefit of helping ease of transaction. Especially in the case of direct cash withdrawals at the nearest bank office or the Automated Teller Machine concerned. However, before this card is used, the Cash Card owner must be able to accept the bond of agreement first with several banks.
4. Debit card
The assumption that Debit Card is only useful for completing payment transactions at merchants is not true. Apart from being a means of payment, this card can also be useful as a credit card.
No wonder there are currently various types of debit cards that are even supported by the Visa logo as well as Master Card. Even though it acts as a credit card, the debit card must be equipped with enough balance to function as a subscription in various e-commerce and online streaming services.
5. Charge Card
The benefits of this Charge Card credit card are not much different from other types because the owner can use it as a means of payment for buying and selling products.
After that, the owner has the right to pay the bill based on the nominal already spent at the end of the month or in the following month. One interesting thing is, this credit card does not charge administration (General).
Types of Credit Cards By Affiliation
A person can apply for an Affiliate credit card at any time provided that he has a close relationship with an agency where both parties will benefit each other. While this credit card is divided into three types, namely:
- Co-branding Card. You can apply for this type of card to the bank if you belong to the managing institution group. Simple examples of these cards are Visa and MasterCard.
- Affinity Card. This card can only be made by an agency or university.
- Private Label. This is a type of credit card released by a banking company without a close relationship between a global network or organization.
Credit Card Benefits in General
Talking about the benefits, credit cards turn out to have an important role in the continuity of transactions, namely:
1. Balance Transfer Facility
The first important benefit of credit cards is the balance transfer facility. This facility simply serves to move bills from the old credit card to the new credit card. If used properly, then this facility can provide benefits for credit card users.
Why is this facility so important? In some banks there are sometimes offers to open a new credit card which generally has an installment value or some benefits that are better than the old credit card. Therefore, for those of us who already have an old credit card, we can transfer all bills into a new credit card with a nominal value of around 80% of the total bill.
That way we can get benefits such as lower interest or a variety of profitable installment facilities.
2. 0% Installment Facility
You certainly often hear or know the 0% installment facility promo if we use a credit card as a payment medium. This is a benefit that cannot be ruled out for credit card holders. By utilizing this facility, of course we will be able to get goods or services at a less cost.
What needs to be considered when using this facility is, we must not forget ourselves and then make a lot of purchases through installments. Although the price offered is relatively cheaper, it does not mean that we are uncontrollable in making purchases. Do not let profits that should give a positive value, actually add to the pile of debt.
3. Cash Withdrawal Facility
Just like debit cards, credit cards can also be used to withdraw funds in cash. Of course, this is one of the very important benefits, especially in urgent conditions. In addition, generally the amount of cash withdrawals that can be obtained by credit card users is also quite large. So that the funds can be used first for several purposes.
There is even a large entrepreneur who has a system of utilizing credit cards to raise business capital funds. This is indeed legal, as long as the turnover of money continues to run well and is controlled.
What must be considered is that in cash withdrawals via credit cards, generally the fees charged are also more expensive than cash withdrawals via debit cards. Moreover, the calculation of interest, of course, will be even more burdensome for us if we are unable to pay credit card bills on time.
4. Foreign Currency Transaction Facility
The next important benefit of credit cards is the facility of transactions in foreign currencies. For those who are used to making online transactions with foreign merchants, of course, it will be helpful if they have a credit card that supports this facility. Even some online services, only have facilities via credit card as a payment method.
Not only online for purchases when we are abroad, credit cards are also very helpful.
5. Reward Point Facility
Almost the same as the 0% installment facility, Reward Point is also one of the advantages that are often offered by many merchants or sellers. This Reward Point can later be exchanged for various benefits such as shopping coupons, cashback to various attractive prizes.
Not only that, the bank itself sometimes also has a program like Reward Point which is certainly also very profitable for credit card owners.
How to Use a Credit Card
After having your own credit card, the most important thing is how to use the card. Do not use it beyond the limits of reasonableness because it can have a negative influence on someone’s finances.
Indeed, in fact this card will give us many advantages. However, if you do not balance it well such as meeting consumptive needs, then this use will actually increase the financial burden.
To prevent a buildup of financial burden, here are at least 7 surefire tips that can help in preventing all problems in the coming days. These tips are classified as the correct way to use a credit card and are also wise so that you can be free from default problems, namely:
- Choosing the type of credit card that really suits your own abilities as well as transaction needs.
- Consider the costs and facilities that you may receive carefully.
- Take advantage of the promo opportunities from the credit card program that you have as much as possible.
- Always be on time in completing administration as well as credit card payments to avoid fines.
- Seek to pay all credit card bills within the agreed time and in full so as not to cause arrears.
- As much as possible, always be optimistic so as not to make cash withdrawal transactions via credit card.
- We recommend limiting the credit cards you have to avoid high administration and unreasonable use. Most ideally, 1 person has a maximum of 2 types of credit cards only.
The seven statements need to be considered well because they will give a positive impression on the credit score you have. It will not even increase the burden, especially in financial terms.
Credit Card Advantages & Disadvatages
After understanding what a credit card is, and the benefits, of course, looking at the advantages and disadvantages will make us reconsider before owning it. Indeed this sounds like creepy, especially to low-income people. But at least some of these conclusions can make ourselves to remain wise in their use, namely:
Advantages of Having a Credit Card
- It is very practical because it is easy to carry or use.
- Get a lot of opportunities to take advantage of attractive promos.
- Any kind of transaction will turn out to be easier.
- All dreams can be realized in realization.
- Prevent a person from the risk of losing their money.
- Bill-related payments can be resolved easily.
- Have the opportunity to utilize funds in an amount greater than the nominal that a person has.
Disadvantages of Having a Credit Card
- 99% of credit cards require their owners to pay an annual fee.
- Burdening the owner through interest rates when used to make cash withdrawal transactions.
- The presence of relatively high interest when using it to send money between banks.
- High interest rates in loans.
- Get additional administration as a form of fine if you are late in making payments.
- More dominant makes a person extravagant.
Actually, whether it is wasteful or not after having a credit card, it all depends on how someone uses it. Therefore, we discussed it to reduce this kind of risk.
Those are some of the benefits of credit cards that must be known and optimized for use. By smartly using existing financial facilities, we can further drain expenses while also getting various benefits.
