Perfect Money TutorialHow Perfect Money Cards Work in your local atm

We must be clear what a credit card is and how it works. A credit card is a financial instrument in the form of plastic card to which the issuer, the financial institution provides a limit of money that customer will use a credit by making use of the card and can never move from that dollar limit granted.

Therefore, it is a way of having a lot of money to pay in stores or withdraw cash at ATMs, that the holder does not actually own their accounts, but is provided by the institution and return to start next month depending on conditions, this card had and who once negotiated with the bank.

What should be clear and most characterizes these cards is that the money used to them do not own the customer, but is paid by the lender and that depending on the payment method chosen, will having to pay interest as if it were a loan fast.

Let's see how it works if you stick to its two main uses: 

- If the card is used to withdraw cash at ATMs, is similar to a loan. That money will start to return to the bank monthly as the agreed amount or a percentage of the amount used.

- If the card is used for payment in stores, it is as if the loan granted by the company were used to pay the purchase made and, just as in the previous case, it will begin to repay the amount used in the following month.

No doubt that is a very interesting means of payment in order to meet an unexpected expense or purchase a particular product in installments is needed and for which do not have the cash at that time.

But here lies the real problem with credit cards, since a lack of control in their use, in many cases means having major financial problems.

And let's assume that negotiates the return of the money used on a card to 12 months (12 payments) which means that, during the first month, applies the interest rate on the 12 outstanding dues.

After the first payment, and reaching the second month, the interest rate applies for 11 months left, and so on, which makes the end, on the last monthly fee has been applied 12 times the interest rate.

So when there is talk that defers only to pay a fee of 1.25% nominal interest rate, for example, refers to the type "Monthly" which is talking about APRs of 22% minimum, which makes clear that it is a form of financing too expensive compared to other alternatives.

We will end up paying twice the interest that had we applied for a loan and that money intended to pay for what we bought.

In this problem we must add the fact that sometimes we use credit card without being aware of the time and the money used, which is not surprising to find that at the end of the month we spent much more than we thought and, in the absence of full payment to attend, we are forced to postpone the return in different periods, which starts the vicious cycle of credit.

The use of credit cards required to have perfect control of their use, as it is the only way to avoid unpleasant surprises.

Many people use strip card and pay it off as you have noticed has an outstanding debt to the bank of a large amount.

If that is joined to the next month re-use the card for other expenses, it really is as if two loans have monthly return.

When we realize we need to address so many returns that exceed combined all our income level, this is an indicator that we are doing things wrong. 

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