What is a credit card?
A credit card is a form of payment for services or products with a predefined credit limit. That is, it is a type of loan granted by a financial or payment institution that issues the card.
Every credit card has a brand – for example, Visa, Mastercard or American Express – whose purpose is to mediate transactions between the consumer and the issuing institution. While it manages operations, sets limits on credit card purchases and maintenance fees, and sends the invoice to the consumer, the brand also manages the technologies involved in the transactions, from card payment machines to accreditation of establishments.
This payment method can be requested by individuals or legal entities and can be either national, accepted only in the consumer’s country of residence, or international, accepted both in the consumer’s country of residence and abroad.
How to get a credit card?
Applying for a credit card is a relatively simple procedure. Those who wish to apply need to look for an institution that issues cards, such as a bank, a fintech, or a payment intermediary. Nowadays, requests can be made online through the issuing company’s website.
It is worth remembering that a current account with a bank is optional to make the request. However, the operator requests certain documents for analysis, which may vary by institution.
In general, the requested documents are an identity card, CPF, proof of residence, and proof of income. The requested documents will be used to analyze the consumer’s profile and determine the credit card limit, given that the card functions as a loan granted by a financial institution.
After registration, it undergoes analysis, and the request is approved if there is no restriction on the CPF. With this, the physical card is mailed to the address provided in the application. In some cases, the card can also be withdrawn at bank branches.
How does a credit card work?
A credit card works like any financial transaction in which two parties agree. The two parties, in this case, are 1) the card issuing company and 2) the card applicant. The issuing company establishes a credit limit that the card applicant can use to pay for purchases and services. The latter, in turn, undertakes to pay the amount of credit used on the invoice’s due date.
The analysis criteria for granting this limit vary from institution to institution, but, in general, it considers the applicant’s financial profile.
If there are purchases in installments, the total limit is released only after each installment payment. To illustrate: the holder of a credit card with a limit of R$ 2,000 buys a cell phone worth R$ 1,000, paid in 5 installments of R$ 200 each. There remains, therefore, a limit of R$ 1,000 to be spent in the month the cell phone is purchased. After paying the first installment of the invoice, the remaining BRL 800 will be “blocked” for new expenses.
Thus, in the month following the purchase of the cell phone, the holder will have a credit limit of R$ 1,200 for new purchases. If, at the end of this month, the consumer does not make any other installment purchases when paying the invoice, with the second installment of R$ 200, the consumer will have a spending limit of R$ 1,400 for expenses in the next month.
Best Purchase Date: What Does It Mean?
Credit card purchases can sometimes be paid within 40 days of purchase. Often, this happens because expenditures made between five and ten days before the invoice due date are carried over to the following month. Some financial institutions inform consumers that this is the “best date to buy” because, by making a transaction on that date, the cardholder would receive the charge only 40 days later.
For example, let’s assume the card’s final payment date is the 30th and the invoice closes on the 20th. In this case, a purchase made on the 19th will be charged on the first invoice due on the 30th of that same day. Month. On the other hand, if the purchase is made on the 21st, the payment will remain on the invoice to be paid on the 30th of the following month.
Not infrequently, the card operator charges an annual fee, the amount of which is detailed on the invoice. The annuity exists to cover expenses such as managing and monitoring the card. This fee can be paid annually or in monthly installments.
The value varies from institution to institution, and some offer gratuities or discounts to attract new customers or retain old ones. It is also possible to negotiate the annuity’s value or even claim the exemption. The more credit card purchases and the stronger the relationship with the card-issuing institution, the greater the chances of lowering the annuity. But there are already new operators in the market that offer cards with no annual fee for their customers.