Practicing these tips will make you an expert in the smart management of credit cards. They’re easy.
Smart finance experts recommend learning to handle credit cards. It is one of the conditions to have well-being and generate wealth.
In general, it’s about making decisions. Decisions about your money. No complex formulas or exercises with a financial calculators.
These are the good practices of using the credit card:
Think before paying
Each time you use the credit card, evaluate what you are buying and the time you will need to pay it.
- For example, a sofa has a long shelf life. If you definitely need the credit to buy it, you could pay it in many installments.
- The wardrobe has a relatively short lifespan. Fashion goes fast. And fast you should pay for these consumptions.
- The market lasts a couple of weeks at most. It is perishable. Why defer it and pay interest? Do you really want to pay interest to buy tomatoes?
It is easy to keep the accounts of the consumptions by credit card if you are going to pay for everything at a fee. You already know that 100% of what you have purchased will be paid on the next payment date that indicates the account statement (and without interest).
It is more difficult, if you use the revolving or revolving scheme because the value of each thing you buy or each cash advance will automatically be divided into 36 parts. At the end of the year, you will see that you owe a lot of money from the expenses you have made (which is equivalent to many interests).
Include the “credit card” item in the budget expenses.
This is a very healthy practice. You can set a maximum value in your budget to pay the card every month.
If the card is the only credit you have, you can allocate up to 30% of your income to the card payments.
Pay a fee
This is the smartest handling you can give your card. Pay everything you can with the card and pay everything you’ve consumed on the next payment date. You will earn points or miles, you will earn in your score or financial rating for a good management of your credit. And you will not incur interest expenses.
Take advantage of the settlement date
In the account statement of your card, you will see the date on which the entity liquidates your consumption to the bill.
If, for example, it is the 30th of each month, you could take advantage and that day, at the end of the afternoon, make a purchase. The account will not reach the next cut. You will have 45 days to pay.
Have the credit line or total quota wisely
The card is a credit and the entity has granted you an amount that you can use.
Using it 100% in consumptions that you will pay in a month, is perfect (if you have what to pay it with).
Using 100% in revolving or revolving and installments is paying many, many, interest. In that case, it is preferable to use other cheaper lines of credit, such as personal loans or home equity cash loans.
Decide how much to pay
Some operations such as advance in cash or payment in dollars do not allow you to select the payment method, fees.
In that case, when the account statement arrives, you may decide to pay 100% of what you owe (Total Payment);
Or, pay a little more than the minimum payment: this way you will be reducing the time you will use to pay the debt and save on interest.
Change the payment method
Also, it is possible to tell the company or the financial institution to modify the form of payment of the consumption you make. You must do it before the statement arrives!
Take advantage of promotions and benefits
Use the miles and points. Why do not do it. It is equivalent to a discount you have earned for your consumption. It seems that there are many miles for a ticket if you do the conversion, but you already have the miles and you will pay less soles for your trip!
Which card are you going to use?
Decide which cards you will use. It is a cost decision (not points or miles).
Which charges you less interest and less money for driving. That should be the favorite.
It is likely that it takes you a couple of months to condition all the practices. But it is worth a try. It’s about your well-being and your wealth.