It is essential to understand that the credit card is not an extra income or extends your salary. It is also a line of credit granted by a banking institution. It is for this reason that it should be used rationally.
Below we list a series of tips that will help you use your credit card responsibly to your benefit and avoid debt:
- Select the most appropriate credit card : Use a card according to your needs, tastes, preferences or item of interest (supermarkets, pharmacy, gas stations, department stores, cash back, or points) that provide you with benefits.
- Plan your expenses: Do not spend indiscriminately. Plan and control the purchases you make with your card, and define the types of expenses in which you will use it. For example: purchase of food, fuel, payment of services, and other types of monthly payments that are generally within your budget and tend to be fixed. Don’t go overboard!
- Take advantage of promotions and discounts: Use your credit card in season of discounts in stores and shops, take advantage of the promotions or benefits granted on your card, for example: 2×1, discount when redeeming points, or extra financing.
- Card limit: It is recommended that your credit card limit does not exceed your income. Preferably, what you consume should be approximately 50% of your income. Avoid affecting your creditworthiness; If you do not have enough liquidity, analyze how much you can consume with your credit card considering the terms that the banking institution grants you to make the payment.
- Timely payment : Make the payment of your card in advance of the deadline. This will avoid paying late fees and penalties for credit rehabilitation that are in addition to ordinary interest, and that increase your financing cost and your debt.
- Payment amount: Try to pay the full balance of your card. Otherwise, the payments must be higher than the minimum payment. Try to make payments at least 25% of the amount owed. This will help lower your financing cost and prevent debt fatigue – you pay and feel like your debt is not decreasing.
- Do not use extra financing or cash withdrawals for current expenses : It is not convenient to use these types of services that your credit card provides for current expenses such as: clothing, trips, trips to restaurants or other types of non-durable goods and services. On the other hand, it is preferable to use them for the purchase of durable goods (white line, black line, vehicle license plates, tools and other types). It is essential to consider the cost of financing and the commissions to pay.
- Card limit: It is recommended that the limit of your credit card does not exceed your income, preferably it should be approximately 50% of the total, so that it is within your payment capacity, it does not affect your liquidity or solvency, in addition to making your debt sustainable.
- Use the points to pay your card: One way to use the points obtained is to pay the balance you owe on your card, in order to reduce your debt and increase your availability.
- Do not exceed the limit of your credit card: Avoid surcharges for exceeding your limit, since this could restrict the use of your credit card when you have an emergency or unforeseen, so it is advisable to maintain an available balance.
- Automatic payments: If you are a very busy or clueless person, this type of service is convenient for you to make payments on time and avoid interruption of service, or incur in arrears.
It is essential to make proper use of the credit card because you can use it as a credit reference when you need it, in addition to being vital when traveling or to obtain some of the benefits mentioned above.
Remember, happiness is multifactorial, and finances contribute positively. Use the tips to promote healthy finances.