Pay credit card fees – Why you should pay or not the credit card annuity. Pay a fee for something you may use once or twice a year, and also have to pay on time? Find out if it’s worth paying that extra.
Everything sounds amazing when they offer you a credit card with a good credit line, months without interest, points program … Until they reach the annuity part. Pay a fee for something you may use once or twice a year, and also have to pay on time? Find out if it’s worth paying that extra.
What is the annuity?
This is a commission that is paid to financial institutions for accessing a credit card . It’s like a gym membership, which gives you free access to your line of credit and its benefits (points program, insurance, cash), which are also a way to “make up” the annuity payment. The cost of this commission will depend mainly on the bank, the type of card and your line of credit.
It is not mandatory to pay credit card fees annuity
Perhaps you are a person who does not use your credit frequently. If your card actually lives in the drawer and you only get it for special promotions or emergencies, should you pay the annuity?
No. But you also don’t have to run out of the ‘lifeguard’ of a credit card. According to the Credit Institutions Law, all banks in Mexico must offer a credit card with no annuity cost, which are often free of commissions such as opening, charging for additional card or replacement of card.
Disadvantages of not paying credit card fees annuity
Although it seems very attractive to have the benefits of a card without paying extras, remember that when it comes to financial products, you should not let yourself be carried away only by an advantage, but analyze the decision in a comprehensive manner. For example, some disadvantages of credit cards without annuity are:
Limited credit Since many of them are basic cards, the line of credit, although it may not be the lowest, is limited.
Charges for not using it. Many of these cards have the condition of being used at least once a month (even some establish a minimum amount), otherwise they will charge a monthly commission for “Administration and Maintenance” or “Not used”, which turns out to be more expensive than an annuity.
Reduced benefits Or null, as these do not exist in the basic cards You can find some with rewards and even insurance plans, but they don’t have as many benefits as other cards.
Not all are zero commissions. In these cases, you will have to pay for the replacement of your card and each improper claim (unrecognized movements). In addition to not being exempt from the “fine” if you miss the payment, as practically all apply the collection fee.
High interest rates. This is where the bank benefits, because if you usually pay the minimum, you will end up paying much more.
Taking into account the above, these plastics are ideal if you use your card little and are not very interested in the rewards; You are totalero and punctual. Also, if it is your first card, it is a good option to create a credit history without much impact on your economy. The key to avoid paying the monthly commission is to direct a fixed payment to the card and pay the bank, instead of the telephone company, for example.
When should pay credit card annuity?
Even though it seems like a bank robbery, the reality is that sometimes the cost of an annuity is actually reduced compared to the benefits. Consider that it is worth paying in these cases:
Greater credit A wider line of credit is convenient for those whose main form of payment is the credit card, but also if you want to put a star in your credit history, because the good handling of a high credit, gives more opportunity to access other credits as mortgage or automotive.
You know and take advantage of the benefits. From discounts to points or miles, through concierge service, travel insurance or car rental, to waiting rooms at airports. To use a card intelligently, is not only to pay on time, but to know everything it offers you and take advantage of it!
Competent interests If your card offers you a low CAT (Total Annual Cost), it could be more convenient, as this gives you an idea of how expensive your credit could be, especially if you pay only the minimum until you cover your debt.
Analyze all your options well before choosing your credit card, remember that this decision should not be based on just one point. And if you decided to pay annuity, do not forget to check with your bank the options that they offer, which can range from deferring it in several payments, to forgiving it if you maintain certain behavior with your card.