Credit card without annuity: How it works
In Mexico there are more than 18 million credit cards in circulation. However, most cardholders pay abusive fees in exchange for this service, such as an annuity fee, a plastic replacement fee and an ATM fee.
What can I do to avoid at least some of these “hidden” cartoons? Our recommendation is that you start by requesting a credit card without annuity or at no cost.
What is a credit card for?
The credit card is a financial instrument that can be used to acquire goods and services without the need to pay in cash. In addition, unlike a debit card, it allows you to take the payment of products or services to future periods.
Of course, that money must be returned to the entity that granted the card. This can be done in a payment for the total, after the “cut-off date” (which is usually every month), or more in the long term, through a “minimum payment”. However, those who choose to pay the minimum amount will be subject to interest rates, which we will explain later.
What is the annuity of the card?
The annuity of a credit card is a commission that banks charge for having access to a credit line and, in some cases, for the availability of benefits that some cards usually have.
One way to view the annuity is like paying a subscription or membership. In the case of credit cards, the issuer usually charges it automatically.
How is it possible for a company to offer a credit card without annuity?
Financial institutions that offer credit cards can generate income in different ways, not only through the annuity fee. Some sources of income are:
- Transaction fees: are paid by merchants; It is a sum determined by offering the credit payment service to consumers.
- Interest rates: they are paid by the customer when he is late on his payment date of the statement.
- Maintenance fees: this includes the annuity and other fees that the cards charge their customers such as payment for services or insurance, the use of ATMs, the plastic replacement fee, among other items.
Looking at these three categories of cartoons, it is clear that there are other ways to maintain the operation of credit cards without charging an annuity.
How to know if a financial institution is reliable
Did you receive a credit card offer without annuity and have suspicions? Have you never heard of the company and are not sure it is reliable? Do an investigation by following these tips:
- Is the financial institution recognized by the market? How many clients do you have?
- What “flag” supports the card? A “flag” is a company that defines the transaction rules of each card such as MasterCard, Visa, American Express, among others.
- Does the financial institution have an updated website?
- What does the press say about the company or the products they offer?
- Have you already published your social networks? What do customers say?
Three key points to consider before applying for a credit card without annuity:
- The annuity is a kind of membership that credit cards usually charge once a year for access to a credit line and, in some cases, for the availability of benefits.
- Financial institutions that offer credit cards can generate income in different ways, not only through the annuity fee; That is why it is possible to offer a credit card without annuity.
- Before applying for any card, with or without an annuity, make sure the financial institution is reliable.