Lina Vargas Vega – [email protected]
Regardless of the situation, people always want to travel. For those who do not have all the money, experts recommend two options: credit cards or revolving loans, both products are a quota of a financial institution to be used when and for what the client wants. However, they do have several differences, and knowing them will help you better manage your finances.
The revolving credit is a product less known than the card, with an amount whose limit depends on the debt capacity of each person. The money is deposited into a savings account and can be used in whole or in part, the interest on this loan is charged on each disbursement.
On the other hand, with credit cards, customers have a monthly amount available, which also depends on the study carried out by the financial institution, people can choose between paying for their purchases in one installment, an action that does not generate interest, or paying up to in 36 installments; (It should be noted that international purchases are automatically deferred to this term, if you want to change that term you must contact your bank).
The first difference between the two products is that with credit cards, interest is charged on each purchase that is deferred for more than one month, while with revolving credit, interest is charged on each disbursement made to the savings account.
Cash is another element in which these products differ. With a credit card you can obtain physical money, but this is something not recommended since the interests increase almost double and it is not always possible to disburse the entire amount of your quota (in addition, the advances have a commission); While with revolving credit, you will always have cash on hand on your debit card that you can withdraw from ATMs. If it is your first registered plastic and it does not exceed the number of monthly withdrawals established by your bank, this action will not have an additional cost.
José Rojas, an expert in personal finance at Solve your Debt explained which clients are best suited for each product “if what the user needs is liquidity, it will be more convenient to have a revolving loan, if what you need is to make purchases in commercial establishments, it is better to have a credit card and defer payment to a fee ”.
Another difference to take into account is that if you are one of those who accumulate miles, points or this type of benefits offered by different commercial establishments, a credit card is better for you since it is not possible with the rotary.
For his part, Andrés Moreno, financial and stock market analyst, explained other differences between financial instruments, “in a revolving loan, the amount of installments is defined, while with the credit card the customer has more options to choose the number of dues. Plastics have loyalty programs while credits do not. Credit cards are more convenient for travelers because they can use them in other countries ”.
The two financial products are enabled for both natural and legal persons. However, the difference is that if a company obtains a revolving loan, it must be used for working capital, while a credit card is free to use. Plastics are very common in companies for the payment of travel expenses and online purchases.
Each product has advantages and disadvantages, and it is a matter of knowing them well and analyzing which one works best for your pocket. According to the latest report from the Financial Superintendence, the average interest rate for revolving loans was 15.89% while the same indicator for credit cards was 22.71%, that is, on average the Credit card interest rates are 6.82 percentage points higher than that of rotating ones.
This does not imply that plastics are a bad option, in fact if you follow Rojas’ advice, you can avoid paying interest by deferring your purchases to a fee, in this case you only have to worry about the handling fee, which is a fixed amount .
Something to keep in mind is that in the financial market there are a good number of banks that offer revolving loans, while only 18 offer credit cards. When deciding on one of the two options, it is important to analyze the different market proposals and know the interest rates offered by each financial institution (see graph).
Just to mention a few names, the banks with the highest interest rates for revolving loans are Banco Mundo Mujer (26.1%); Mibanco (26.1%) and Credifinanciera (21.8%). While those with the lowest interest rates are the Banco Bbva (11.68%); Banco Av Villas (11.51%) and Banco Itaú (11.41%).
Similarly, according to the same report from the Superfinancial as of last December, the financial entities with the highest rates for credit cards are Banco Serfinanza (25.52%); Colpatria (25.37%) and Bancolombia (24.76%).
Finally, the lowest rates for this product are found at Banco Cooperativo Coopcentral (17.51%); Finandina (18.96%) and Banco de Occidente (19.77%).
Variations between different rates for various loans
Interest rates vary according to the requested credit, for example, housing loans tend to have lower rates since the bank has a fixed guarantee, if the person does not comply with the payment of the installments, ultimately the financial institution You can enter to dispose of the property in question. With revolving loans and credit cards, the bank has no other guarantee than a promissory note, for this reason these financial instruments usually stick to the usury rate certified by the Financial Superintendency.