While credit cards are a product that has declined in popularity due to the international financial crisis, they are an interesting alternative that may be necessary in many cases. In this article we are a small tour of what must be analyzed to choose the credit card for each person.

At first you have to know what it is used the card. Accordingly, look for different options. For example, if required for personal use, almost any will suffice us. But if you need to make purchases abroad or online, we must be attentive to details.

As basic options, it is recommended always to think of Visa or MasterCard, which have a strong presence in most countries of the world. Made after this election, it should also be thinking why bank eligible. In general, the big banks offer credit lines, and often beneficial or essential to have this same bank in a savings account, which also allowed to use the automatic debit to pay the bill for the card.

An important tip is to consider whether any of the supermarkets that we buy are offered credit cards, because in many cases could be determining the gains that are achieved with these special cards, while use in other sectors.

After considering these variables, we can use tools called comparators cards, which allow us to easily compare the cards offered by banks. Its use is simple and saves time, but then it is advisable to continue further analysis.

It is also important to stay informed about the latest news about credit cards, because banks often make offers point or launch new products with great benefits. For this, we can make use of blogs and newspapers specialized digital-oriented economy and finance.

The extension of credit has been established for many companies and financial institutions in the instrument of penetration and market depth, and hence the source of increased risk of loss and impairment of assets, then the waves of uncertainty when you do not have the personal advice or to mitigate the risks of bad credit.

Credit Risk .- "It is the possibility of loss due to failure of the borrower or counterparty in transactions direct or indirect resulting from the non-payment, partial payment or lack of timeliness in the payment of the agreed obligations." (The important thing is to set the value at risk (VaR)) "

It is important that banks or credit must judge the solvency of their current and future borrowers and efficiently manage your portfolio, taking into account that "to extend credit" can engage in three types of risks: 1) Risk of illiquidity, 2 ) Instrumentation and legal risk, and 3) Risk Solvency. The first refers to the lack of money by the debtor to pay, reflecting the failure of not being able to make payment within the predetermined period or undertaken after the date that was scheduled under the contract. The second caution or lack of knowledge in the conclusion of agreements, contracts, preparation of promissory notes, bills of exchange, or legal instruments that require the debtor to pay (information asymmetry) and the third risk could be incurred for lack of real analysis and identification of the subject of credit that has no assets or collateral for the payment of its obligations. This requires that the following procedure is adopted for research and credit analysis, reflected in a scoring of CEDIT. (Record qualifying clients). This is the basis for developing the model to be developed by financial institutions under the New Capital Accord (Basel II). To identify the probability of credit risks; adapting widely accepted models.

Therefore lending institutions should establish efficient patterns of administration and control of credit risk that are discussed in the business, in resonance with their own risk profile, market segmentation with the characteristics of the markets in which operations and products it offers, so it is necessary that each institution develop its own framework, which ensures the quality of their portfolios and identifying, measuring, control / monitor and mitigate exposure to risk and the expected loss in order to maintain adequate coverage of, or technical heritage.

The methodology for the management and control credit risk phases: identification, measurement, risk control and monitoring are essential to mitigate the risks: (See Administration and control of business risks by Felix Campoverde)

The criterion for the formulation of policies for granting credit to conservative or liberal, should not depend on whims and will of the directors, but in many circumstances and situations: Credit by type of customers and products, profiles of the prospectus credit , endogenous and exogenous factors (market) of the lender, and that granting a credit implies the need to balance the imperative of investing in the customer (business view) and, secondly, increasing the financial needs and costs (economic view). Depending on the situation at all times and circumstances, the institution must establish conditions or other policies for granting credit. For example, interannual periods, depending on the seasonality of the product or depending on the economic situation. (If you recall the issue presented in administration and control of business risk analysis of credit remains quantitative and qualitative).

The symptoms and signs of the behavior of the credit portfolio is essential for the classification of current and future clients, this methodology and analytical techniques based on historic performance of credit operations and quotas, to determine the expected loss on Based on the probability of default, the level of exposure and severity of loss for calculation of these components must have a database of at least three years immediately preceding, containing sufficient information to calculate expected losses .

To calculate the expected loss should be considered such factors as: 1) Probability of default (Pi), 2) exposure level of risk (E), 3) recovery rate (r), and 4) severity of loss (1 -r).

Its formulation is: PE = E * Pi * (1 - r)

Understood:



Probability of default (Pi), is the possibility of occurrence of partial or total failure of a payment obligation or the breaking of a contract claim, a contractually specified period;

Exposure level of credit risk (E) .- It is the present value at the time of the breach in flows which are expected to receive from the credit operations;

Recovery rate (r) .- The percentage of recovery carried out on loan have been breached;

Severity of loss (1 - r) .- It is the measure of loss that the lender would suffer after making all efforts to recover funds that have been missed, at this time are executed or guarantees must be received as dation in payment. It is worth noting that the severity of the loss is equal to (1 - recovery rate);

Expected loss (PE) .- It is the expected value of loss from credit risk in a given time horizon, resulting from the probability of default, the exposure level at

default and severity of loss.

To mitigate credit risk is often borne in mind that through information obtained from the client and the business relationship is a series of alarms that should be investigated and tested successfully:

* Arrears in payment of bills.

* runaway expansion in a short time. - (You must check their financial capacity).

* orders over consumption.

* Request repeated renewals .- (Evaluate each petition demanding guarantees to them.)

* Non-payment of taxes and social security contributions.

* expenses disproportionate to the activity .-

* decline in the local budget.

* Other ...

Emerge from these specific provisions, the individual analysis of each subject, estimates of credit losses, which are formed on one segment of the portfolio, under the current regulations of each country. (Control Agency). "You can not measure what you do not know" why should be identified to measure the probability of default.

The executive of Credit as part of its operational process should always be considered:

* Each credit application is an opportunity.

* Do not prejudge, but listen with interest

* Give credit to the softness and humility (not to give it as a favor)

* Rules can enrich knowledge

* Ensure that the client knows the contractual deadlines.

* Be fair and consistent in terms of discounts and surcharges

* Do not allow the customer to bring the negotiating

* Ensure that the figures are correct

* Do not pretend to have knowledge that does not really have (ask, investigate and guide)

* Look at the tree (advantages and disadvantages of credit)

* Thinking that is not only good but easy recovery.

* Do not commit prematurely to the Customer

* Do not give hope when there are none.

* Do not attribute the rejection of credit to other people

* Never assume an attitude of flight to the customer.

* Accept responsibility and make decisions quickly

* Simplify customer operations

* Check frequently the policies and procedures as Collections and Credit laws.

Remember that the success of this loan in full recovery of investment, and for this we must mitigate the risks in the process of granting and recovery.

"A GOOD CREDIT GRANTED A CLIENT well served"

I will give some tips so you can better deal with credit cards.

Do not abuse their use. Credit cards give a false sense of ability to pay, which means that often fall into the temptation to purchase or consume products or services unnecessary.

If you are buying expensive goods, such as a TV, furniture or electronic equipment of great value, preferably using the extra funds or any type of credit fixed.

Try to use credit cards for low value purchases.

Try to make the payment of the credit card as soon as possible just bill your credit card, and will generate less interest. To do this you know the exact date of your billing card, and use tools such as home banking (online banking), automated teller machines (ATM) or call to get the amount to pay and file it as soon as possible.

Likewise with the purchases. Suppose you are buying something expensive and need to do significantly with the credit card, do so in the days of billing, for example, if your invoice on 6, make your purchase on the day between 7 and 9 or so. With that, consumer will benefit because this will be reflected from the next billing, which has yet to spend a long time and then have the regulatory months 30 days to make the minimum payment on your card where the consumer will reflected. Remember that every time you make a consumer credit card minimum payment INCREASE it. With this technique you delayed this increase by almost 30 days.

Finally and most importantly, ATTEMPT TO PAY A MINIMUM PAYMENT AMOUNT TO THE MAYOR. If you can not, however much effort you make, pay an amount greater than the minimum payment required by the bank, then believe me, start to worry about their financial situation!.

Regardless of the high rates of growth of electronic commerce, it is worth remembering that in many countries, the surveys are conducted to determine shopping habits on the Internet, have revealed that one of the biggest barriers to electronic selling, is the Buy doubt on the safety of introducing data on the network.

To solve this problem many financial institutions, many banks and major credit card companies have launched a new product, the virtual credit card.

What is a virtual credit card?

There are several characteristics that differentiate this virtual cards of the traditional, in summary are:

These are prepaid cards, so the cardholder can use it for, you must load it before. The burden is on balance a checking account or credit card to another "normal". When you load the card the user has the record that has limited the balance of your card balance that you've got, so you never, even in case of interception of your data, fraudulent charges may be made, above the balance .

Virtual credit cards offer the possibility to change the keys in each of the operations performed, this gives greater reliability to their owners.

The use of these cards are restricted to internet, so it can only be used for purchases in e-commerce.

There is greater control of spending, because these cards unique to the web, and have limited the amount of pre-disposition to, control over money spent on e-commerce is total.

Virtual credit cards are just virtual, so they do not usually stand in plastic, the issuer generates an account specifically for these cards, which control the balance of inputs and provisions, as well as the operations performed without need for a hardware, and without the risks of loss or misplacement.

Credit cards allow you to download the virtual balance in a bank account associated with your use, so that buying shares completed, can be emptied, to be more secure control over its funds.

Evaluation of virtual credit cards.

It should be stressed that the main advantage of these cards is to generate confidence that they produce in their users.

But do not forget that the major credit card companies and banks and other financial institutions that sell, often incorporate all credit cards, insurance fraud. Using a credit card from a good company, it is certain to be able to claim against possible vandalism actions taken against it.

The security system of the virtual credit card, it's more a realization of an old system, which avoids the introduction of continuous data on the internet for many years, the prepaid system has been offered by leading companies in electronic commerce such as Paypal, which may operate upon the creation of an account, you can go recharging, without entering personal data in e-commerce websites. Paypal has been offering for many years, support not only to ensure the security of electronic transactions, but also about the delivery of the products offered.

In any case the evaluation of this new product, the virtual credit card, is unambiguously positive, insofar as it strengthens the security of electronic transactions and to generate more confidence in their use.