They are basically 3: Interest on installments, rotating interest and interest on progress. Let’s see below the detail of each one.
Interest on installments. This is the interest that is applied to the installments of a purchase. It is usually the lowest interest, compared to the other two and is added to each of the installments.
Example: If you buy something of $ 10,000 in 10 installments, each installment, without interest, should cost you $ 1,000 pesos. But with an interest of 1%, the fee will be $ 1,100 a month.
How many interests are there on credit cards?
There are many businesses associated with credit cards that give the option of buying in installments without interest. So choose well the associated businesses that give you these types of fees. However, we are sorry to tell you that even if you buy in 10 installments without interest, you will not return only the $ 10,000 you asked for. This is because there are so-called Extra Charges on all credit cards.
Even if you buy in installments without interest, remember that credit cards have some extra monthly charges. Those amounts, although they are not so high, will increase your payments by a couple of pesos. And remember that if you buy at 10 months, each month those extra charges will apply. They are not paid only once, if not 10 times.
So if you buy something of $ 10,000 in 10 installments without interest, you will not pay $ 1,000 per month since you will have to add the maintenance fee.
For example: if you bought something of $ 10,000 in 10 installments of $ 1,000 with a maintenance fee of $ 500 a month, you will pay $ 1500 a month and not $ 1000, as you thought when you bought in 10 installments without interest. In total you will pay $ 15,000 as we see in the following table:
The only option there is not to overpay is to buy without fees
In other words, use your credit card to buy something and pay the total at the end of the month. There you should always buy after you are billed. In this way you do not wait so long to enjoy what you want in case you do not have the money at the moment but you are sure to have it at the end of the month.
This interest is applied to your credit card bill each time you “CANCEL THE TOTAL” of the monthly payment. It is more expensive than Interest Quotas and adds to what you owe. If you want to know all the details of this interest, you can read our article: Minimum Credit Card Payment: Why is it not convenient?
Interest for Advancement.
It is usually the most expensive of the three and is charged each time you wire cash from an ATM with your credit card. For this reason, we advise you to avoid, as far as possible, except in cases of extreme urgency, money transferring from your credit card, because you will not be able to get the interest with anything.
These interests appear on your Account Statement
And beware, if you can no longer avoid requesting an advance to your credit card, calculate well how much it will be, because the worst thing you could do is take out 2 times cash for not calculating how much you needed. If you decide to spin $ 50,000 and then you are still missing an extra $ 30,000, you will have paid – in the case of my bank – $ 14,000 more, for the final $ 80,000 you turned. Think about it and if you need $ 80,000 better take that amount just once and then return $ 87,000 and not $ 94,000. Not all entities charge the same. In other words, there are cheaper credit cards than others.
If you want to know the other charges a credit card makes, check out our article: Charge for maintenance (and others) of your credit card, do you know them?