What does the minimum payment of a credit card mean?

As a cardholder it is your duty to know the meaning of the minimum payment of a credit card. This will prevent you from incurring default or over-indebtedness due to improper use of your card.

The minimum payment is the lowest payment required by the lender to not declare your default. The default or financial delinquency is a state that implies that you are not fulfilling the payment obligations acquired. This means a macha in your credit history, which can cause you many future inconveniences, including the denial of other credits.

Note that the minimum payment is the smallest amount you can cancel, so you can pay more than that. In fact, it is recommended that you always cancel more than that amount, to reduce interest payments.

 

How is the minimum payment of a credit card calculated?

How is the minimum payment of a credit card calculated?

The Superintendency of Banking, Insurance and Private Administrators of Pension Funds of Peru (SBS) determines how such payment is calculated. For the calculation of the minimum payment, the two payment methods used by the card users are used:

  • Purchases made in fixed installments established at the time of payment.
  • Acquisitions made in a single installment, called revolving debt.

 

How is the minimum payment of a credit card used?

How is the minimum payment of a credit card used?

The SBS has established regulations for the use of the minimum payment that benefits the user. The bulk of the minimum payment is dedicated to the cancellation of the revolving debt. In this way, priority is given to the payment of the type of debt that generates the greatest interest.

However, it is still not convenient to cancel only the minimum payment of the credit card. If you use that strategy, you will only get your debt to increase constantly over time.

How to identify if a credit in UVR or in pesos suits you

In Colombia, to fulfill the dream of buying a home you can opt for different financing alternatives, including mortgage loans. At the same time, within these you can also choose between credits in pesos or in UVR, depending on which one suits your profile.

Mortgage loans

Mortgage loans

The credit in UVR, that is, in the Unit of Real Value, establishes the quotas based on the Consumer Price Index (CPI), which depends on inflation and other elements, so the quota varies throughout the term of the credit.

In the case of credit in pesos, you can set a fixed fee, so you will know how much you will pay during the entire term of the credit.

But how to determine which one suits you best?

credit loan

The main difference is presented in the ability to pay. If the bank verifies that you have a good payment capacity, it will advise you the credit in pesos, since at the beginning the fees are higher since they mostly cover the interest, but as time goes by, the fee starts to cover more capital and less interest.

In the case of UVR credit, they are normally granted when the credit capacity is not as good, as it allows you to access low fees at the beginning, which will increase as time goes by. In both cases, the bank’s evaluation plays an important role as it will know how to advise and derive it according to the study they make of their financial reputation.

Choose the option of the credit

credit loan

Do not forget that, whether you choose the option of the credit in pesos or the credit in UVR, it is important to carefully select the entity to which you will request the loan, and correct all your doubts before making the final decision. To do so, you can compare the alternatives using the Betsey Trotwood mortgage loan comparator.

How to identify if a credit in UVR or in pesos suits you

credit loan

In Colombia, to fulfill the dream of buying a home you can opt for different financing alternatives, including mortgage loans. At the same time, within these you can also choose between credits in pesos or in UVR, depending on which one suits your profile.

Mortgage loans

Mortgage loans

The credit in UVR, that is, in the Unit of Real Value, establishes the quotas based on the Consumer Price Index (CPI), which depends on inflation and other elements, so the quota varies throughout the term of the credit.

In the case of credit in pesos, you can set a fixed fee, so you will know how much you will pay during the entire term of the credit.

But how to determine which one suits you best?

credit loan

The main difference is presented in the ability to pay. If the bank verifies that you have a good payment capacity, it will advise you the credit in pesos, since at the beginning the fees are higher since they mostly cover the interest, but as time goes by, the fee starts to cover more capital and less interest.

In the case of UVR credit, they are normally granted when the credit capacity is not as good, as it allows you to access low fees at the beginning, which will increase as time goes by. In both cases, the bank’s evaluation plays an important role as it will know how to advise and derive it according to the study they make of their financial reputation.

Choose the option of the credit

credit loan

Do not forget that, whether you choose the option of the credit in pesos or the credit in UVR, it is important to carefully select the entity to which you will request the loan, and correct all your doubts before making the final decision. To do so, you can compare the alternatives using the Betsey Trotwood mortgage loan comparator.