Knowing how to use a credit card will save us a lot of headaches. This card is neither good nor bad, it depends on how you use it.
Many people prefer cash because they say they spend less. Others for fear of being scammed, making a mistake or going into debt without control. The biggest problem with credit cards is that it is very easy to spend without realizing it because they provide a false idea of wealth. In addition, the expenses that we are making are not reflected until within 48 hours.
Despite this, well used, they are an excellent means of payment both in physical stores and online. We can also withdraw money from ATMs and, above all, they allow us to defer payments.
Next, we present several tips to be able to use them in the best way.
1) Differentiate between total payment and minimum payment
Sooner or later we will have to pay for the purchases and withdrawals of money that we make with our card. The details of all the consumptions generated by using the credit card are specified in the so-called summary or statement. When we receive it, we will be able to pay the minimum or cancel all of our debts.
In the minimum payment we do not pay everything we spend, but a mandatory amount required by the card issuer and set according to everything we have consumed. Although it is a tempting option, we have to know that from the first minute we will be paying interest. Basically because if we pay the minimum, the rest is financed and they charge us an interest rate, generally much higher than those charged for other loans.
The total payment consists of paying everything that we have spent. In this case, we will accumulate all purchases and fees until, on a certain day of the month, we must pay everything. This option is recommended because we do not pay interest.
2) Understand the credit card statement
The summary or card statement can be divided into two parts.
The first part is the header, where the customer and card details appear. You will also see the balance that you will have to pay, both in pesos and in dollars. Finally you will see two dates, the closing and expiration. The closing date indicates the day until which the consumption made will enter the summary, while the expiration date indicates until when you have time to pay it.
The second part of the abstract is the text. There are the details of the consumptions, the purchase dates, the names of the businesses, the amount of fees and the values. Below you will see the “fine print”, which explains the different forms of financing and the conditions under which this card is being used.
No one is free from any mistakes, not even financial institutions. Invoices and tickets, in addition to guaranteeing the purchase, can be used to verify expenses. We have to get in the habit of carefully reviewing the amounts that appear in our summary, so that we do not pay for any charges that we have not made.
3) Control its use
We should not use the credit card for impulse purchases, which in most cases are unnecessary, but rather for planned consumption. Credit cards do not mean extra money, but a future debt. Therefore, if the expense is not necessary, we can plan the purchase for later, for when we have savings or not make it directly.
In case of theft, loss or simply not to use it, it can be deactivated from the cell phone or by calling 0800. This can give us peace of mind because we will have the cards under control.
4) Avoid charges, commissions or interest
Those who do not know how to use a credit card may have expenses well above their income. If in several months we cannot pay it, it is best to stop using them and regularize our situation before it is too late. Paying the minimum payment for several months in a row can be a snowball that gets bigger and bigger. If you have debts that you can’t pay, don’t take out another card to cover them! Let’s not plug one hole with another.
Another important issue is not to accumulate cards, since many times we pay a commission for each one. It is convenient to cancel those that we do not use because, even when we do not use them, they are generating charges and commissions. Finally, let’s avoid using the card to withdraw cash, especially if it is in a different entity than the one that issued the card to us, since we will pay a lot of commissions and interests.
5) How to use your credit card abroad
The types of payment offered by cards to pay abroad are usually better than those offered by currency exchange. Therefore, if you travel outside the country or make an online purchase abroad, credit cards can be your ideal ally.