Credit cards have been a very common topic of discussion in recent times and clearly, they are a double-edged sword for anyone. These allow us to make large purchases, take family vacations, and shop online, but at the same time, using credit cards without a plan to manage debt can lead to serious financial hardship.
In other words, they are a great help for personal finances, but you have to be careful, because their misuse can generate more problems than solutions. For this reason, it is important to be informed and know the correct way to use this tool in your favor and that it does not become an extra concern.
I leave you four tips for using a credit card.
Use the credit card in purchases that offer months without interest
In countries like Argentina, where inflation reduces our purchasing power month after month, the use of a credit card to pay for purchases in installments is one of the most important points when it comes to obtaining benefits with it. If one has a fixed income every month, it is recommended to make purchases in installments without interest, since the opportunity of the offer is taken advantage of and the product can be paid in time. The credit card will maintain an active and functional balance.
Understand that it is not an extra salary
Another point to keep in mind is that the credit card is not an extra salary, but rather a tool to help us improve our quality of life month after month. For this, we must have a detail of the payments that we are making with the card and what is the total amount that we are accumulating every month.
That is to say, if one has a salary of $100,000 pesos, the expense should never exceed that amount and the use with the credit card is not an exception, the monthly payments or installments with the card should not exceed that amount either. There are particular occasions or situations where we may be forced to overuse the card, but this should not be prolonged in the long term.
Not paying the card minimum
The credit card allows you to pay a minimum every month and thus prolong the payment of the remaining amount. However, this practice only generates future problems since the remainder accumulates interest many times higher than inflation. In addition, what is not paid one month accumulates for the next and it becomes increasingly difficult to get out of that situation called “snowball”.
As we mentioned before, knowing and keeping track of the fees that we must pay every month is a key point so as not to have to resort to this practice.
Take into account the days of payment
Along with not paying the minimum every month, it is also important to be clear about the payment and expiration dates of the credit card. This is due to two reasons:
1. The most important, organize the payments, month after month, so as not to forget to pay and that this generates more interest. Each day that passes without us paying the card, this generates an extra charge for that amount and as we mentioned before, the charge is too high.
2. Between the settlement date and the payment of the card, there is generally a period of two weeks. This period gives us the opportunity to “put our money to work” and generate an extra amount for our personal finances. In other words, if we have to pay $100,000 pesos for the card in two weeks, we can invest that money in a “money market” fund that will give us approximately 4% per month.