The credit card has a very simple operation. A certain amount is made available to the client in the form of credit and, with the card, the client accesses that amount and makes purchases, committing to pay off the debt with the card operator on the date established for its maturity. If the invoice is paid in full, there is no interest. If the minimum amount is paid, or if no amount is paid at all, interest was charged on the amount due. And therein lies the danger of the misuse of credit cards: by failing to pay your debt, the customer will be subject to very high interest rates.
The payroll credit card, on the other hand, is based on the same principle of offering the customer a certain amount in the form of credit, which can be used via the card. The difference is that this credit is obligatorily linked to the customer’s payment, being discounted on the payroll, as is usually done in payroll loans.
Although both are based on direct debit discount on payroll, payroll loan and payroll deductible credit card are different in some ways, starting with their nature. While in the loan the credit converted into value is delivered directly to the applicant, on the card the credit will be used to pay your invoice, accumulated throughout the month. The practical consequence of this difference is the lower interest charged on the part of the loan and, on the part of the card, a lower percentage of the payable salary.
If compared to overdraft, conventional credit card or even personal loan, the payroll credit card is the best option. As it is linked to the customer’s maturity, it guarantees the operator the security that the payment will be made, which allows the collection of lower interest rates than the other types mentioned.
In addition, by preventing late payment or even the minimum payment of an invoice, the consigned cards help to avoid excessive indebtedness of their users, since they prevent the formation of the so-called snowball debt.
Another great advantage is the absence of an annual fee, common among conventional cards. In addition, a card is possible even if the customer’s name is negative with credit protection services. It is worth remembering, once again, that being linked to the customer’s payment is a strong enough guarantee for card operators.
The only disadvantage that exists is in relation to the payroll loan modality. As already mentioned, the loan charges interest rates even lower than those on the card. Among the usual credit options, it is the only one that is currently the most advantageous.
However, it is worth remembering that loan and card can be combined. With a limit of 35% of wage consignment established by law, only a consignment of 30% is allowed on loan, the remaining 5% being exclusive for consignment via card.
Without a doubt, the payroll credit card appears as a great credit option in the market. Simple to use and beneficial for both customers and operators, this modality promises to gain more and more space.
Now that you have learned about how the payroll credit card works, its advantages and disadvantages, how about knowing 5 tips to get out of debt?