Purchases with credit cards for several months without paying interest are increasingly popular in Nicaragua, but many readers of Astro Finance have expressed their distrust for not knowing what they consist of and why they would give them a credit without charge them. Here I explain.
The first thing to clarify is that it does not apply to all businesses, there must be a prior alliance with the bank that will finance the credit through your card. Also, according to the characteristics of the trade is the availability of terms; in Nicaragua they are offered at 3,6,9,12,18 and up to 24 months, depending on the type of product to be financed, since not all of them merit very long payment terms.
Credits to purchase a card
These types of credits are made as a purchase with the card, that is to say that the total amount of the product is charged to the card, the difference is that your payment is calculated in equal installments, according to the number of months of term. For example, the purchase was for 3,000 dollars at three months term, you will pay 1,000 córdobas per month.
The selection of the term will depend on the ability of the customer to pay and their fees will be reflected in their statement. Always remember to check it and verify if the amount assigned corresponds to the invoice price of the good.
EYE: you can not lose sight of the fact that to make that purchase you must have available in your card the total amount to be paid. That is, if your card limit is $ 500 but the product you wish to purchase under this mode costs 600, you will not be able to do so.
Another relevant fact is that to use this form of payment the minimum amount for the purchase is $ 100 or its equivalent in dollars, does not apply for small purchases. Likewise, if once the purchase is charged you continue using the credit card, you will pay the corresponding interest for those other purchases and you must pay them on time and in an orderly manner, do not assume the payment of the interest-free credit fee as part of the payment of those Other purchases are different things.
What happens if you don’t pay on time?
Although the promotion consists of not paying interest, that is under a specific payment scheme. If you alter it, you will undoubtedly have to assume the corresponding charges, that is, pay the interest. If you use this type of credit, forget that you will charge it to the card and only pay the minimum, that does not apply for this modality.
Many readers have expressed their concern about these types of credits, arguing that they do not believe that there is no profit involved, but let me explain that in the case of trade, their benefit is to significantly increase their sales. Every day that trade closes its POS (point of sale, or point of sale) and the bank immediately pays that amount and finances the product in installments.
If you don’t earn interest on that purchase, what does the bank earn? The bank seeks to increase its turnover, and for each purchase made with cards (debit or credit), it charges a commission that is assumed by the merchant. That commission varies according to the type of business, for some it is 4%, for others 5%, 7%, and may even be less.
As you will see, it is a credit alternative that can be taken advantage of, but as with any loan before taking it, it should be thoroughly analyzed:
- If it is really necessary.
- If you have the ability to pay without affecting your finances.
- You must make a balance between the durability of the good and the term in which you will pay it.
Remember that there are healthy limits for borrowing, in your hands you are staying in them.