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Debit, Credit, Revolving … Where do I get the most out of my bank cards?

In full debate on whether Spain has left or not, at least in the bank card data they bet on the thesis of the European Union. The first quarter of 2017 has closed with another significant increase in the number of bank cards: 75.95 million of this means of payment, almost 26 million debit and about 50 million credit and growing. This data anticipates that in the second quarter the absolute record of the year 2008 will be broken (when the crisis broke out), in which a maximum of 76.4 million cards was reached.

This growth, based mainly on credit cards, is most clearly seen in trading volumes. In the first three months of the year alone, 30,327 million euros in purchases have been paid with cards and more than 27,387 million euros have been withdrawn in cash from ATMs. Both the maximum figures reached in Spain in history. With all this, there are many Spaniards who carry two or more cards in their wallets. Due, credit and within these revolving or shopping mode. Cards that can be used for different uses but not in all cases are made efficiently.

 

Debit

Debit

It must be the only way (with exceptions), where we get money from ATMs. Credit cards also allow it, but in some entities it only allows us to do it precisely on credit. That is, instead of charging it against the card, it does so against the credit the card has. With this, we will not only pay interest between the time we have taken money from the ATM and the settlement of purchases and cash provisions of the card, we will also pay commissions, which are often very high for their minimum (3% on average, but with minimums that also average between 12 and 18 euros for each provision). There are other entities that do allow you to choose when it comes to making money by debit or credit. But we always take special care if we are going to use the credit card at an ATM. This always informs about the commissions, let’s make a complete reading of it.

If we take special care when choosing the cashier and search (relying on mobile applications from banks, for example), those in which to get money is free or at the lowest possible cost.

Regarding purchases, many prefer to use it because they directly charge the purchase with the money we really have in mind. Although, doing so leads us to lose some opportunities that do offer some credit cards, such as buying now and paying later, when the card purchases are settled, without paying interest for this operation.

 

Credit card

Credit card

We must distinguish between the cost of paying purchases to the increasingly common (although still a minority), get or transfer cash to our account.

Regarding the first. It is still the most common to use the credit card to accumulate purchases and then pay all later when it is settled. For example. All purchases from 21 to 20 of a month and then paid on the first day of the following month. It is comfortable, advantageous, but as long as we control everything we have bought and have money to pay it when it is settled.

The second option is to finance our purchases, dividing them or paying a fixed or variable fee each month. In this case, we take interest into account and look for the formula that allows us to pay as soon as possible.

With regard to transferring cash, let’s analyze the double cost well. On the one hand, interest, which should force us to try to return the amount as soon as possible. Second, the commission, often high, for disposing of this money. For this, we are attentive if the card has some type of promotion that limits this cost and if it is not, let’s try to do it only in one operation. For the minimums charged by entities, it will be generally cheaper (or in any case, with the same cost), to have 1,000 euros on credit in an operation than to do it twice for 500 euros each.

 

Revolving or shopping cards

Revolving or shopping cards

As the name implies, they are special credit cards to finance purchases. This is why they have pros and cons. The point in favor is that their interest rates are lower than traditional credit cards, this allows us to fractionate cheaper.

The point against it is precisely that many of these only allow us to buy precisely financing the purchase, which always generates interest costs. For all this, if we do not want to finance we use the traditional credit card, if you want to finance, with the revolving you will pay less.