Times of high inflation and low economic growth require maximum care of your money, since every peso counts when deciding which product or service to buy.
If the credit card is one of your main allies, it is important that you know that the Total Annual Cost ( CAT ) will allow you to estimate the real cost of your credit, since in addition to the interest rate it includes commissions, annuity and insurance. .
According to Citibanamex, there are six key details that you should know about the CAT and that will help you avoid confusion when estimating it.
1. If you want to contract some type of credit, you can take as a first reference the CAT published by financial institutions, which appears in the advertising of credit products. This CAT is reported for informational purposes and for its calculation is based on the product’s average interest rate.
2. The CAT does not always pay everything. As it includes all commissions, it also has some that you can avoid, for example, the “Late Payment Commission”; if you always pay on time, you will never pay this commission.
3. The real CAT is personalized and this is due to the fact that the financial institution grants different conditions that depend on factors such as the risk profile, credit history, level of indebtedness, among others. So you can have the same financial product as other people, but with different credit conditions.
4. As a person has a better credit history, financial institutions usually offer better financing conditions, such as lower interest rates.
5. The CAT is not synonymous with the interest rate, since it also considers other inherent costs of credit.
6. Each person can have several financial products and each one with a different CAT.
3 suggestions
a) To compare between financial products from different financial institutions, your first reference is the CAT.
b) In addition to knowing the CAT, it is important to know the benefits that each credit product offers. This way you can choose the one that best meets your needs.
c) Search and select among the different options of credit products the one with the lowest CAT and that responds to your needs and payment capacity.