Introduction of 10 Secrets About Credit Cards Banks Don’t Want You To Know
10 Secrets About Credit Cards Banks Don’t Want You To Know. And for more financial education, remember to follow me on my Financial Instagram. And if you want to know a little more about me and that we talk about things other than finances, follow me on my Personal Instagram @sebascelis. The first secret, which very few people know, although more and more people already know it, is that the bank even makes money if you make purchases at an interest-free installment. Even if you don’t pay handling fees or other things.
Why Because every credit card is used, there is a processing fee that is normally shared between the franchisee (ie Visa, Mastercard, or American Express) and the bank or card issuer. Let’s say that in countries like the United States, American Express is a financial institution by itself, so they take all the commission. And in fact, he is one of those who earn the most for that concept. But regardless of whether you pay interest, the bank will still earn money from each purchase you make and that is why the main motivation is to use the cards.
Suddenly the secrets plus what the mechanisms are), is that every bank has a customer retention department. That is a group of people who are there to serve those who want to leave, who cancel their credit cards for whatever reason. What this means is that these people have the goal of making your stay. Sometimes selling you benefits that you already have and suddenly you don’t know, or even giving you benefits that you don’t have yet.
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handling fee exemption
It means that these people have the ability to give you things that you are probably not getting at the moment, only if you call to say that you are going to cancel. Of course, each bank is different and some will give you a handling fee exemption, they will give you certain purchases without interest, or depending on the case, they will even reduce the interest rate temporarily, as I have learned from some banks that they do. But others are probably more demanding, and they simply want to tell you that the benefit of having a credit quota available at all times or selling you.
What you already have … Which are, for example, if it is a good category card, VIP lounges, or assistance and insurance, or many things that suddenly many people simply ignore and never use, with which they convince the majority. The idea is to call and take advantage of the fact that they have this type of capacity so that they give you something that you are not taking advantage of at the moment. Most likely, the vast majority of people do, take advantage of the waiver of handling fees.
Which is one of the most unjustified expenses that exist in these products. Secret # 3 is that there is practically no product as profitable as credit cards. When we see the advertising of credit cards, they will always sell our benefits, access to VIP rooms, car rental insurance, purchase protection, price protection, and many things that are real and truly exist. What happens is that these things are paid in some way … And the way they are normally paid, is with the interests of the people who make purchases in installments, which are the highest interests that exist.
handling fee exemption
They are so high because this is simply an unsecured line of credit. If you do not pay, there is no car that the bank can keep, there is no house that can be repossessed, there is no tangible thing with which the bank can recover what has been borrowed and lost. But financial institutions have definitely made a lot of money since they started taking out credit cards and for this reason, they invest billions of c, just for you to take their cards. Of course, this does not mean that we cannot benefit from credit cards, and in fact (as I will mention in another of these points) even have a credit balance or, that is, make us even unprofitable customers for the bank.
The totaleros” or the people who always pay a single installment, who never spend money on interest; We are not one of those who contribute as such to provide the money that will ultimately pay all the benefits. Therefore, we can simply turn them into tools that contribute to our finances and not take them away. In fact, banks have terms to refer to the people who use the cards for a single installment: Sometimes they call it “totaleros”, sometimes it is called “leeches”, sometimes they call them in different ways, simply to have us as ” unprofitable customers “and.
We are still profitable because of what I mentioned in point # 1. Secret # 4 is that the vast majority of the charges that a card has are not justifiable. That is, they have no reason to exist. For example, the handling fee. When you ask why they charge me for handling, the bank says “well it is for providing you with the credit line, because you have the plastic available at all times, and many other things”. The line of credit to the bank does not cost anything to give to you.
international purchases surcharge.
The risk assumed by how much you pay is directly related to the interest rate, not the handling fee. The plastic itself is covered with many other things … In principle with the expenses that you make with the card, the purchases you make, and the percentage that they earn in the first month, surely they recover the value of the plastic that is very cheap, even with shipping. And when we talk about charges such as “international purchases surcharge.
The bank may want to justify: “No, there is a currency conversion, and change from dollars to pesos”, or something, and NO … Changing dollars to pesos is done by the franchise: Visa or Mastercard, and what the bank charges you is because it wants to, and that’s it. Because if. There is no justification for a surcharge. The same occurs with ATM withdrawals. That is not that they serve to sustain the network of ATMs, and that suddenly if withdrawing by ATM would not cost, then the ATMs of all banks would go bankrupt.
advantage of all the benefits of a card
Because that does not make sense either. Really the interests, and even the handling fees of the debit cards that is another thing, or the charges of interbank transfers and others cover that, and they have money left over and there is a lot of profit left. Secret 5 and I think that many banks simply prefer not to have this type of customer, is that if you take advantage of all the benefits of a card, we are talking about insurance, for example, cashback or welcome bonuses, miles, and other promotions and opportunities that exist at certain times.
It may at some point not be really profitable for the bank. It is very complicated to happen, it is very difficult, eventually, with enough time, you will be profitable, even if you buy a single installment. But it may be that the benefit that they obtain from the processing percentage that they earn for each purchase, by subtracting (since you would not pay a handling fee, let’s assume you have a card without a handling fee) that you never pay interest and that you do not have insurance.
That you withdraw by ATM, or make advances, or anything like that … If you use the VIP room type benefits, if you take advantage of some purchase protection insurance if something is damaged, lost or stolen product and with that insurance you get it back, or if you use price protection and buy something and then you see it cheaper, and you get that value in return; at that time the net customer value balance for the bank could be negative. And the idea is that. commented it 10 Secrets About Credit Cards Banks Don’t Want You To Know.