Credit Card Annuity: What and How it Works
Rate this post If you are a credit card user and you want to be an individual that improves your economy 100%, you should already know that the annuity of a credit card has its advantages and disadvantages. If this is the first time you read about this term, I recommend that you continue reading so that you get out of the darkness of the financial sector and become illustrious with content that will be worth your money.
What is credit annuity?
The annuity of a credit card is the cost you must pay annually for the use of your credit line Yes! You have to pay the bank for the fact that they give you a card of this style to meet 365 days. Regardless of whether you use it frequently or not, you have made important movements with that account or not.
The annuity is a recurring charge that the bank requests for the use of your credit line.
It should be noted that the cost will depend on the bank. It can be from 200 to 15 thousand pesos. Also, in case you can avoid paying the annuity payment, the bank will proceed to suspend the use of the card.
The disadvantages of the credit card annuity
Having a credit card that handles annual payment leads to decisions that will benefit or harm your finances. As everything has an advantageous side but also some cons, here I present the disadvantages of this annuity so you can plan your finances in a better way:
- The commission will be charged annually to your statement and the amount will depend on the bank. Are you willing to pay between 120 and 11,000 pesos a year?
- The lower the annuity charge, the higher the default fees are.
- You must allocate an important disbursement to cover the monthly payment of the credit card.
- Not any contract works. You must choose the one that allows you to cancel your credit account before the end of the year. That is a great way to use your line of credit for specific things without paying the annuity, or getting cards without this commission.
In which cases an annual credit card is not appropriate
- If you are a totalera person, and you never let the interests of your payments and purchases add to your accounts, the ideal is to opt for credit cards without annuity. This is because, if you are already in a savings plan and paying zero interest to the bank, the payment of an annuity turns out to be an out-of-budget and, above all, excessive and unfounded payment.
- If you want to acquire a credit card only “for an emergency” it is better that it be without annuity, because that “emergency” could occur, today, tomorrow or never and surely you will not like the bank to charge you for that wait or will you ?
Can annuity be avoided?
Yes, and you can find that option by opting for basic credit cards. According to the Mahalko Bank, these cards were introduced in the market in 2010 and their purpose is to acquire goods and services, nothing more.
You will easily understand that it is not convenient for banks to offer these products and that is why you need to make sure if your bank can give you this alternative.
In addition to not paying the annuity, with these cards you can obtain a credit limit of up to 200 times the minimum wage in Mexico City; as well as the exclusion of additional data in the line of credit in your basic products.
