The use of credit cards, theoretically, is very specific, they allow payment on credit, deferred payment, but they would also allow the disposal of cash on credit. However, the latter is perhaps the most controversial and least advisable option for a credit card.
Unfortunately, especially in the crisis years, both in the recent past and even during 2020 and so far in 2021 against the backdrop of the pandemic, the use of credit cards as a source of cash has grown markedly.
However, this use is not highly recommended as we will see throughout the article.
The first and most important answer is, or should be the most obvious: interest.
Among the different financing options available to a user, using a credit card to borrow money is probably one of the most expensive. The average interest rates of credit cards for this purpose are much higher than the average interest rates of any personal loan or other financing models, both among those offered by banks and alternative financing.
Therefore, the interest to make the product radically more expensive, making a loan, which would be relatively cheaper in another format (personal loan, salary advance, etc.) expensive.
The second answer, and no less important, is fees. While it is true that personal loans usually carry some commission, withdrawing cash with a credit card means assuming cash withdrawal commissions, which are generally expensive, and which will be added to the already expensive interest rates.
The last element, and no less important, is the exposure to over-indebtedness. When we constantly accumulate credit card debt, not only do we also constantly assume interest payments, but we expose ourselves to a serious risk: living on credit. Living on credit not only has a cost in interest, it also places us on the edge of default, since the moment we cannot, for whatever reason, meet the credit requested on the card, we have to face indebtedness, more interest, and default rates.
It is clear that, despite what we have described above, there will be users who continue to consider the use of a credit card as a tool to be taken into account. It is also clear that it is indeed useful for this purpose. But, even in this case, we should not be tempted to use this tool only in exceptional cases, punctually, for very specific provisions and that once repaid in the amortization of the card, they will not be repeated except in another exceptional situation.
The use of a credit card must be oriented, in any case, to take advantage of its potential of deferred payments without interests, when they offer us, or to assume certain payments that we can divide, in which, although also we are charged high interests, the advantage of immediate payment and to assume those interests is greater than the processes and procedures of requesting a personal loan.
What are corporate prepaid cards? In the 80s and 90s of the last century, coinciding with the tremendous economic take-off of technology, prior to the bursting of the bubble in the late 90s, it was really popular and frequent the figure of the corporate credit card.
At that time, prepaid cards were not yet widespread. In fact, the closest thing was the company debit card, in which the control of expenses was given by the shared use of certain accounts and the presentation of the corresponding receipts by the employees using the cards.
Today, the prepaid card concept has largely evolved the use of corporate cards.
First of all, you have to consider the very nature of prepaid cards to understand why they are better than other options such as credit cards.
By its very form, a prepaid card can work individually and only against the balance that has been deposited on it. This means that, for example, if different amounts are needed for different cards, it is perfectly possible to recharge them with the amounts needed for each of them.
On the other hand, once the available balance on the card is exhausted, it cannot be used in any way. This was a problem that with corporate credit cards was limited only by the credit on the card itself, while in the case of debit cards, it was limited to the common account to which all the associated corporate cards were charged.
Therefore, the first advantage is the individuality of each of the credit cards, which allows to adjust the expenses to be made according to the expected reality, and not vice versa, to analyze the expenses against the consummated fact of the same. This helps to better control spending, but also to better control the hands courses with the prepaid card.
Another relevant issue that gives prepaid cards an advantage as business cards is the fact of fees. A credit card, although it may contain a maintenance fee for the first year, will generally have some kind of commission, and on the other hand, the cash withdrawal on credit will be an added expense. However, with a prepaid card, this situation will not arise, since there are no issuing commissions, and there is no maintenance commission either. Therefore, in any case, the commissions will be those corresponding to cash withdrawals from the different ATMs where it is operated.
Finally, it should be taken into account that, on the company account, it will be possible to associate different personalized prepaid cards, thus facilitating the identification of the user, and the control of expenditure means working only against the deposit made, with the personal control of each of the cards individually.
Alternatives to cards: Google Pay. Today, we find ourselves in an era completely dominated by technology. That is why we will increasingly find options in the market with which to replace card payments.
Among these options is Google Pay. This is a payment method that is very convenient and simple to use, since you can make use of it from your own smartphone.
With it, it will be possible to make payments in establishments, for which we simply need to configure our credit card details. It is also possible to make transactions completely online, as well as to take advantage of services offered by Google or other applications that are compatible.
There is still a large number of users who do not trust this type of payment methods, as they believe that the level of security they have is very unreliable. Nothing could be further from the truth. The truth is that we can configure Google Pay in such a way that the security of payments is as high and effective as possible.
To begin with, the most important thing is to learn about this service. Google Pay is a platform through which it is possible to make online and physical payments from the mobile terminal itself. To do this, you must have a bank account and a Google account to which we can link.
The origin of this payment tool dates back to 2018, as a result of the union between Android Pay and Google Wallet. However, as its own name suggests, the latter would become the successor of the former. The main objective of this tool is to allow to carry out financial transactions from the smartphone itself without putting at risk the money or the private information of the user who uses it.
Making use of Google Pay, it is possible to carry out payments from the mobile itself, and even also from the smartwatch or other android device that has NFC technology. As mentioned above, it is also possible to make online payments through the Google store.
Although at first, the main idea of this tool was simply to be able to make payments via mobile, over time it has been expanding its functionalities to offer a much more optimal and satisfactory experience to its customers.
Currently it is possible to add to the tool boarding passes, coupons, or membership cards, among others, and it is even possible to synchronize the Gmail account itself. With Google Pay it is also possible to send money to other users, and eventually it is planned that the tool will even reach Ebay.
If you want to use Google Pay, it is essential to have a device that incorporates NFC technology, since without it it is not possible to make payments through the smartphone and other devices.
How the pandemic has influenced card payments. With the onset of the pandemic, users stopped making most of their payments with cash, replacing it with cards, a much more convenient method of payment that does not require any contact between the customer and the person attending the establishment.
A study carried out by the European Central Bank has found that more than half of Spanish citizens have acknowledged that they have made less use of cash since the pandemic arrived in the country. This is something that has also happened in many other countries belonging to the euro zone, such as Ireland or Belgium.
In contrast, the countries where there has been the least use of cards since the virus arrived have been: Latvia, Estonia and Malta, in which less than 25% of their citizens claimed to make regular payments with their plastics.
Of the total number of people surveyed, 38% used cash to make their payments in supermarkets. Then, 57% of those surveyed made their purchases of everyday items in small stores, and 63% made transactions in various restaurants, bars or cafeterias.
Of those who made their payments with cash, they were asked whether other types of payments were accepted in the stores where they shopped, to which more than 80% of the respondents answered that other methods were accepted, such as payment by card or even by cell phone.
The significant increase in card payments is largely due to the pandemic, as it is much less dangerous to pay with cards than to have direct contact with another person by exchanging coins and bills. However, it is also important to note that another study conducted by the ECB states that cash payments continue to be the most widely used for small day-to-day payments.
In this way, the organization itself highlights that the coronavirus pandemic has accelerated the use of cashless payment methods. There is no doubt that consumers in the euro zone increasingly prefer to make their transactions using cards, although there is still some way to go before plastic can surpass the use of cash.
In order to understand the impact that the pandemic had generated on the different payment methods, the decision was taken to complement the study carried out last year 2019, by means of a survey conducted last June of this year.
In it, 4 out of 10 respondents claim to use cash very infrequently since the outbreak of the pandemic. What was curious about the survey was that the majority of respondents said they would like to resume using cash when the pandemic ends.
The payment method that has evolved the least during these months has been payment by smartphone or smart device, since more than half of the people surveyed denied having this type of payment.
Why the CVV code is important. At a time when everything is so digitized and data theft through internet scams is something that is the order of the day, security is a key factor in all our banking operations.
Data theft through fraud through the network, is something that happens constantly every day, and unfortunately there are not few users who fall into this type of deception. From SMS that urge us to enter links, e-mails supposedly from our bank that ask us to fill in personal data or fake access pages, are just some of the most common examples of scams that users tend to fall into.
Therefore, security is a key and indisputable factor that should not be missing in absolutely any of our financial transactions, whether online or offline. In our credit cards, a method of payment increasingly used nowadays, we find various methods to avoid identity theft or any kind of vulnerability to our plastics. The one we are all undoubtedly familiar with is the security code, known as CVV.
As we all know, it is a series of numbers that we use to validate our purchases, either through the Internet or in any physical store. It is a very short code of numbers, usually no more than 3 or 4 digits, and it should be noted that it is not exclusive to credit cards, but can also be found on debit cards or even prepaid cards.
The purpose of the CVV is to increase the security level of our plastic to prevent anyone else from using the card illegally. In addition, it is important to bear in mind that we are going to find this type of code in different ways, depending on the operation we are going to perform. For example, if we pay in a physical store, we will have to enter the 3 or 4 digits in the card reader to complete the purchase. However, if we make an online purchase, normally this digit will be found on the back of the card, and it will be the last 3 numbers on the card.
The CVV is used, as we have already said, with the main objective of keeping our transaction secure, so that only we will be able to confirm it by means of the introduction of this series of digits. For example, if our credit card were to be stolen, they would not be able to complete any transaction without knowing the CVV of the card. In any case, at the slightest suspicion of theft or disappearance of our plastic cards, it is vital to go to our bank and ask for them to be blocked to prevent fraudulent transactions from being carried out with them.
Although it is not a 100% infallible security method, it is one of the most effective to avoid identity theft and, therefore, our money.
Credit card or virtual card, which is better for online shopping? In an era so dominated by technology, we can make any type of purchases through the network. But, in addition, we have multiple payment methods available, and we can choose the one that best suits our needs and personal preferences.
In fact, there are so many payment methods that there is a great lack of knowledge on the subject on the part of users, who normally tend to use only the option that seems most convenient to them without taking into account whether there are other better ones or ones that provide greater security to the operation. For example, most users tend to use their credit cards as the only option to make purchases on the Internet, without stopping to investigate whether there are much better options.
Online card payments
There is no doubt that making a payment with a card is a very simple task, which practically boils down to entering the digits of the card in the payment method to make the purchase, when in other methods you have to register or fill in much more information and it ends up being a much longer and tedious process.
Therefore, it seems to be very clear that cards are a payment element that will continue to be part of our financial operations for a long time to come. Now, to make our online purchases, we can choose between a conventional card and a virtual one. The choice depends on our needs and the level of security we want in our transactions, among other issues.
In the case of virtual cards, they have a series of pros and cons that we need to know in depth before deciding to use them. They are used exclusively for online purchases, regardless of the format in which our bank provides them. Generally, they are usually prepaid, so every time we need to make a purchase, we will have to charge the corresponding money. This is a very important pro to take into account, since the bank is the one who authorizes the movements made with this card, and in addition we only need to load it for the purchase in question, so that the rest of the time the balance remains at 0.
As for its cons, it should be noted that it works exactly like a prepaid card to use, except that in the case of the prepaid card, it offers the option of making offline payments.
Regarding credit cards, its pros and cons are as follows: one of its biggest pros is that it gives the user the opportunity to use credit, when it should not really work that way. A much more efficient way to make use of a credit card would be through the control of the payments we make, since as we know, the use of credit can generate very worrying debts for our economic stability. As for its security level, the truth is that we are much more exposed with this card than with a virtual one, since it is directly linked to our bank accounts.
Credit card purchase insurance. Credit cards are, without a doubt, the most widely used payment method by most users, especially since the arrival of the pandemic and the problem that cash presented in terms of virus transmission.
Something that many users are unaware of, is the amount of associated insurance that their credit cards have, among which we can find basic purchase protection insurance, or some much more sophisticated for higher level cards.
Whatever our case may be, it is important to know and claim the use of these insurances, since in this way we will be offering an extra protection to our cards, as well as to the financial operations we carry out through them. Without going any further, by having a purchase protection insurance, we will have the opportunity to recover the money in the event of a fraudulent purchase, something that we would not be able to do without such insurance.
As we have been saying, credit cards are a payment tool to which we give a greater use on average. In fact, studies show that in country, most users have more cards than they should. The ideal is to have one or two cards, for example a credit card and a virtual one. However, most users have so many different cards that many of them do not actually use them.
Another of the most common mistakes related to credit cards is that we tend to choose them because of the advantages they offer in terms of payment deferment, cost reduction when withdrawing money from the ATM, or even the bonuses and discounts we can enjoy when we have them.
We pay attention to all these things, long before even paying attention to much more important elements, such as knowing whether the card in question is associated with some kind of insurance and whether it can be effective or not. For this reason, we should be much more conscious with the choice of our plastics, and pay attention to what really matters.
One of the most common insurances associated with cards, as we have already mentioned, is the purchase protection insurance, and we should be aware of certain questions about it. To begin with, it does not have the same coverage in all cases, but they all agree that they protect our card against unforeseen events, theft, fraudulent use, etc.
In order to be able to claim the use of this insurance, the bank will require you to comply with three conditions. The first one is that you must make the total payment with the card associated to the insurance, something that is vital if we want the insurance to really protect us, although it is true that there are exceptions in which we can use the card to pay partially.
The second condition is that the claim times of the particular conditions of the insurance must be respected. It is really a period of time more than high to be able to make the claim, since it usually oscillates between two and three months, generally.
The last condition is that the insurance will cover in most cases for theft, but not usually in case of theft. This means that purchase protection insurances work almost exclusively in the case of theft, so if it is theft, we will not be well protected. Therefore, we must know how to differentiate between what is robbery and what is theft. Robbery is usually a violent act in which force and intimidation are used. So, if we are robbed but these elements are not used, the insurance will not protect us against the incident.
Cards for cryptocurrencies. At a time when technology has become an almost indispensable tool in our daily lives, it was not strange to think that cryptocurrencies could go a step further and show themselves as a fully functional option to make our daily purchases through cards.
Given the importance that cryptocurrencies have been acquiring in recent years, the most important companies of the moment have decided to increase their potential. To this end, they have created various cards with which to make any type of purchase, not only on the Internet but also in a physical store.
How cryptocurrency cards work
This is possible because the cryptocurrencies will be transformed into traditional money, in addition to the fact that the coins are stored in their wallets and allow us to change currency at any time to suit our needs. The conversion system that these new plastics have is very simple: through an application that we will control from our smartphone, we can change from cryptocurrencies to traditional money or vice versa, depending on the need or the type of currency with which we want to pay.
The application of course has many more features in addition to allowing us to convert our money. Through it we will be able to control all our finances, since it allows us to link our bank details. And not only that, but it will also be possible to store in it the currencies we have available through wallets.
For all these reasons, the application is fully complete and functional for the daily use of users, since all the information is stored in one place, it will not be necessary to go to different applications constantly to check our available balance or see the status of our bank account.
In addition, it is important to note that we will be able to make payments with these plastics in any business where credit or debit card payments are accepted. Therefore, at the time of payment is to choose the type of currency with which we want to assume the payment of the product in the application with our mobile, and bring the card to the terminal to complete the action.
The key to success with this type of card is to choose an entity that has them and that is totally reliable. We cannot forget that it will be the one who will handle all our personal data and our accounts, as well as being in charge of carrying out the money conversions we wish to make. That is to say, the entity must be duly regulated by the pertinent authorities of the country to which it belongs, since only in this way we will be sure that our money is protected at all times.
If we wish to obtain one of these cards and we have found an entity that complies with the pertinent legal requirements, the time will come to share certain personal data to be able to carry out the contracting. At this point, it is advisable to review the data that are usually necessary to make the contracts, because there will be cases in which the bank wants to take advantage and obtain much more information than it should have.
As we say, it is usually necessary to give our name, our address, e-mail or our telephone number. In the case that the entity demands more information and it seems to us a suspicious act, the most appropriate thing will be to cancel the operation with this bank and to go to another one that really is reliable.
Nowadays, the vast majority of users have credit and debit cards. However, not all users know how to make proper use of them, so they end up acquiring a significant debt throughout the year with their bank, a not very pleasant situation for anyone. For this reason, below we propose a series of tips to improve the use we make of our plastics.
The truth is that there is no doubt that most users do not use their cards correctly, since, for example, they tend to abuse credit and end up acquiring a significant level of debt with their bank from which it seems almost impossible to get rid of. In order to make good use of this type of financial tool, we must be aware of its advantages and disadvantages.
Before signing up for a new credit card, you should find out which one is best for you, taking into account your financial and personal situation. That is to say, if we have found a card that meets our needs, before anticipating to its immediate hiring, we must study carefully the conditions that the entity imposes us to be able to acquire it.
This is really important, since many of them we will not even understand at first, that is why it is better to consult about them to the entity before signing anything, so that they explain everything to us and we have clear to the level that we expose ourselves with this future contracting.
As we have already mentioned, our personal situation is key when it comes to knowing the type of interest we can afford, as well as the late payment commissions we can acquire, the possible associated insurance, discounts… All these aspects must be clear to us before contracting the card, because no matter how ideal it may seem at the beginning, if we have not been properly informed, it is very likely that we will have unpleasant surprises in the future.
Once we are completely sure that the card we have found meets our needs and we can assume the obligations that the entity imposes on us, it is time to contract it. Two very basic mistakes that users often make at such a decisive moment as this is not to ask for a copy of the contract they have signed, nor to sign the card itself.
In spite of the little importance that is usually given to them, they are two very important aspects in case the plastic is stolen or some type of fraud is committed, two events that unfortunately have been increasing in country for years.
As with everything in life, it is preferable to take as little risk as possible, and although it may seem impossible that someone will steal the card or commit fraud with it, it is necessary to claim a copy of the contract and sign the plastic itself, since we do not know what problems the future holds, and in this way we ensure that we are well protected.
A widespread mistake in which almost all credit card users fall into, is to live off the credit that the plastic offers them. This is a blunder mainly because of two aspects. The first one is that by pulling the credit, in the end we assume exorbitant costs, since the card has a series of interests to be taken into account. And secondly, it is a financial tool with very little flexibility with respect to non-payments, so it will undoubtedly end up causing an over-indebtedness that is very difficult to assume for any average family.
Therefore, the use of these cards should be moderate and conscious. The user must be properly informed about them, both for better and for worse, so that an unforeseen event does not pose a long-term problem in any case.
Theft or loss of a credit card: What to do? In fact, a good part of the frauds committed with credit card come precisely from this situation, therefore, it is necessary to take into account basic questions about what to do in case of losing our card or in case of theft of the credit card.
In the last years, and fundamentally due to the improvement in the protection systems of credit and debit cards, the frauds have diminished in a sensible way, although, it is necessary to indicate that these continue being by far one of the worst problems as far as misuse and fraud financial co-producer is concerned.
Year after year hundreds of thousands of people around the world are affected by theft or loss of their credit cards which, in the best of cases, is reduced to a period of time without being able to use the card, as well as the blocking of the same, and which in other cases leads to more or less serious fraud.
The loss or theft of a debit or credit card, mainly in the second case, is a situation against which we, as users, cannot maintain full control. There are those and some recommendations that we will see later to try to prevent these situations.
Preventing the loss or possible theft of our credit card involves things that we as users can do, some of which are very simple and which only mean incorporating a series of routines when using this financial product which, on the other hand, is so commonplace for all types of users.
In the first place, when we make payments with the cards, we must not accept at all to lose sight of its use. This is basic, giving the card to a third party to pass it through a T PV is never a good idea, but it is even less so if we also lose sight of the process.
Of course we should always keep the tickets issued for the purchases or services we pay for with the cards. This is essential in case we have to make future claims against possible frauds made with our card by third parties.
Of course, the first action we must take into account is the immediate communication with the issuing entity of our cards in case of loss or theft. In many of the cards we find the telephone number to which they called already directly printed, in any case at the end of the article we provide you with a battery of contact telephone numbers according to the different card issuers.
When we take the step to communicate a lost or stolen credit card, we contact the issuer and automatically block the use of the lost or stolen card. After the step of canceling the lost or stolen card we can request the replacement of the same, here it is rare that this happens immediately, and more common that it is done after a certain period of time.
It is very likely that we may have to make some kind of documented statement about the loss or theft, in fact, the second action to take into account is to report to the police the fact, since this report will also serve us for future complex situations in case someone uses our card fraudulently.
Nowadays there is only one reality: the inhabitants of this planet depend more and more on plastic cards for their convenience, versatility and speed. This situation is accentuated during the holiday season, when we probably only carry cards in our pockets.
But it is precisely at this time of the year when the chances of having our wallet stolen or lost increase, because no matter how careful we are, sooner or later this happens. The important thing in case of theft or loss of the card is to try to keep calm and act as soon as possible. To do this, it is essential to be clear about the steps to follow, so this guide aims to clarify certain basic aspects.
The first thing to do as soon as you realize that your cards have disappeared is to cancel them or at least report their loss. It is essential to act promptly, since the longer the cards remain activated, the greater the chances that they will be used for purchases or cash withdrawals at the ATM.
To do this, do not make the mistake of going to the commercial office of the financial institution with which we have contracted the card, which will probably be closed at the time of your visit, due to its business hours. Simply put, the vast majority of financial institutions and banks offer a 24-hour customer service, often free of charge and very fast, that will be able to assist you and guide you through the process.
In case you cannot reach a manager of your own bank, go directly to the issuing company (Visa, Mastercard, American Express). If you do not have a number handy, remember that at ATMs you can find this information on their screens without having to insert the card.
You should try to remember exactly the time and of course the date when the card was lost or stolen, in order to be able to report it properly and thus limit our liability in case the card is misused at a later date. In addition, it is necessary to take note of the time and date when the call was made to the entity to request the cancellation of a card, as well as the name and surname of the person who answered the call. This information will be very useful if we need to make a claim.
If it is a robbery, it is convenient to report it to the authorities.
Remember that in these cases the most important thing is the speed with which the report is made. Once the report has been made, the free insurance included in most of the cards will be responsible for the expenses fraudulently incurred with our money.
It is important to bear in mind that most institutions can offer, in fact they do offer, insurance when contracting credit cards. However, these insurances do not always respond to the same coverages.
Insurance for theft or loss should cover any charge made to our account up to 72 hours before the notification we make to the bank after such theft or loss, but for this we must always comply with the communication in a timely manner so that the insurance assumes any expense that has been made without our consent.
In the event of card theft, summer is one of the most likely times of the year. For this reason, there are a series of measures that you should have clear and execute them to be able to prevent this problem. Keep in mind that in the case of card theft the prevention measures are the same as for any theft or robbery, here the cards, although they are a good loot for the hulls, are only a part of that loot.
The basic questions have to do with, for example, trying not to expose the cards unnecessarily, that is to say, cutting them up only when we are really going to use them and never grouped together. If possible keep this lack of grouping constant, i.e. never carry all your cards together in the same wallet. Never lose sight of your cards, not even when you pay for a service or purchase, i.e. require that the card is always swiped at the POS in front of you…
It is a matter of common sense, a bad use of the cards does not only refer to a bad use of their conditions, in general you will have to apply to the care of these products the same precautions that you would put in practice if it was a question of cash.