2024-01-08 22:06:11
Credit cards are a double-edged tool, because although they could help with the acquisition of goods and services, they also could cause endless debts, if they are not used correctly.
It is worth remembering that a credit card is not an extension of salary, that is, they do not offer more money than what is received monthly; That is one of the main mistakes when using one of them, because people spend beyond their purchasing power and by not being able to pay, the interest increases.
That is the second mistake when using a credit card: not considering the payment of interest, such as Total Annual Cost (CAT).
What is the CAT?
The Bank of Mexico (Banxico) points out that the Total Annual Cost or CAT, as it is commonly known, It is a standard measure of the cost of financing a loanwhich is expressed as an annual percentage.
The CAT is the amount that includes the costs and expenses of a loan offered by any financial institution.
However, this cost is not determined, that is, Each financial institution establishes its annual commissionshence, By consulting the CAT of each credit card, you can know which one is “cheaper”this is determined with a lower interest rate.
Thus, when contracting a credit card you must consider that, in addition to the monthly payments for your purchases, you must pay other costs such as: interest, commissions, as well as the payment term.
How to acquire a credit card at Buró de Crédito. enlarge
What is the CAT for?
The CAT allows credit card users to compare the cost of different banks that offer credit. The lowest percentage reveals which is the cheapest loan.
How is the CAT calculated?
To calculate the CAT, the interest rate of the card you have or want to acquire, as well as the annuity, the opening commission and additional charges for use and payment of credit such as insurance premiums, bonuses, amortizations and discounts.
Not contemplating its payment can lead to complications with payments, so you must know all the information related to CAT to contract any financial product can help you maintain your financial health. The idea is that with the appropriate information you can make accurate calculations of what your possibilities are without risking owing more than you can pay.
The Total Annual Cost or CAT is the cost of your credit for one year. This percentage incorporates the interest rate, the annuity and other expenses related to said credit. Condusef recommends requesting the card with the lowest CAT. pic.twitter.com/7AzIDHXt1o
— Credit Bureau (@BurodeCreditoMX) August 21, 2020
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