It is impossible to live without a credit card, but many people think it is bad and the cause of all financial problems.
Buying unnecessary things, spending over budget, accumulating debt by buying that 80 ‘TV… If knowing how to use your credit card can put a lot of order on your finances, the opposite may be able to destroy your savings or planning.
Know how to use credit card wisely
It is therefore very important to know how to use credit card wisely. Not only to avoid problems in your finances, but also to organize the budget and win prizes, miles, points or whatever you want.
Stay away from revolving credit
Revolving credit means that you have spent more than you can afford in the month, so you will have to pay interest on what you failed to pay in the coming month. Many Brazilian families use revolving credit every month.
The interest you pay can be very high, and if you’re going into a store and can’t go without buying, it’s best to leave the card at home.
However if you need to make a purchase and do not have the money to repay this debt on your card by the due date, it is best to think of an alternative, such as applying for a personal loan.
The advantage of a personal loan is that you will pay much less interest and will be able to plan the repayments each month because the installments are known in advance.
Advantages of knowing how to use credit card
When you use the card to pay most of your bills and always pay the cash invoice, you can achieve several benefits:
- You are building a credit history that you can use in the future to use other financial tools such as mortgage finance.
- Promotions offered by banks: Higher limits, interest reduction, benefit programs, airline miles, exclusive store discounts, travel insurance, car rentals, earn points you redeem for purchases, purchase insurance, access to Vips salons at airports, etc.
It is very important to have a control of what you can spend each month, always knowing that at the end of the month you need to pay the invoice in cash. Find out how much you can spend each month and check out the partial invoice over the internet to be prepared and track day to day.