Credit cards are beneficial according to the use you give them. Responsible use maximizes your benefits. They are a great tool to buy now and pay later.
Take into account the following tips!
REALISTIC: maintain a credit limit that is within your real payment possibilities. The idea is that it is very easy for you to pay the card. Financial entities are the ones that decide and assign a credit limit according to your income level, indebtedness and credit behavior. Always check that this credit limit is within your real payment possibilities.
Even if they offer you a higher credit limit, check your budget first and analyze how much credit you should take.
We suggest you to go through the knowledge shared on Lendingmoney.com about credit cards, business financing, and personal loans. With this knowledge at their disposal, customers will be better equipped to manage their finances and save money.
IMPORTANT: The credit card is a means of payment, it is not more money to spend, nor is it that you now have an extra salary.
We must avoid thinking that having a credit card is equivalent to having extra money, that is a serious mistake. Using your card correctly means taking advantage of its benefits, without spending more than you earn through compulsive purchases.
PAYMENT CAPACITY: Everything you buy with your card must be within your monthly budget. Do not spend more than your ability to pay.
You must know well what your ability to pay is. To do this, write down your income, then save 10% of that value, and subtract all your essential expenses from the difference. What you have left over is what you can buy extra without compromising your expenses and savings.
CONVENIENCE: With your card you buy now and pay later. It is not to finance expenses or purchases. For that, it is better to ask for a separate loan.
If you use your card as a source of financing, you will be paying a higher interest rate than what you would pay if you took out a loan. It is more profitable to take out loans than to finance your purchases with a credit card.
PAYMENT DATE: is the deadline to pay your balance for the month. Schedule with your Bank so that date coincides with your payroll payment.
Cut-off date is the day of the month on which the registration period of what you spend on the card ends. Payment Date is the deadline to pay your balance. Never go past the latter.
Many people stumble over their credit cards when making payments because they don’t pay their balance in full by the due date. This causes them to pay more interest and sometimes late fees when the payment date is passed. Always try to pay before the deadline.
Use the card in the first days after the cut-off date, so there will be more time between the purchase and the payment date.
MINIMUM PAYMENT: It is the “minimum” amount that you have to pay to avoid getting a bad rating. However, you would always pay interest by not paying your balance in full.
Only when you cannot pay the entire balance of the card, pay a smaller amount. Even so, we recommend that you not only pay the minimum fee, but also pay an amount greater than the minimum payment. This way you will pay less interest in less time.
The most important thing to manage your card well is to pay the full balance every month within the established dates. If it is not always achieved, it is best to pay an amount greater than the minimum payment to get out of debt as quickly as possible. Don’t let fees accumulate.
Keep in mind that if you only pay the minimum payment each month, the period to pay off the entire balance will be longer, and therefore you will pay more interest.
CASH ADVANCES: It is when you withdraw cash with your card. Do it only in cases of true urgency. There are extra charges for it.
The cash is obtained from an ATM or directly from the card issuer, and then that value is charged to the balance of the credit card. It is an “instant loan”.
A fee or commission is usually charged at the time of withdrawing the cash, which can be a fixed amount or a percentage of the amount withdrawn.
Cash advances are tempting, a simple procedure is enough and that’s it, you already have the cash. But they should not be used as part of your income. Instead, try to make the purchase with your card and use the cash advance only for emergencies.