Credit cards can be a very useful tool and make our lives easier in many ways, as well as they can sink us and make us enter into very difficult financial situations. So how do we stay alone with the nice part? Everything is in the use we make of this great tool.
Then, know the five things you should not do with your card because they simply push you to financial loss.
Use it as an extension of purchasing power
If every month you cover a portion of your expenses with the credit card, you are spending more than you have, which will harm you when you have to pay the bills. Use your card wisely and not to cover the fixed budget, unless you pay everything before the installment expires.
Not knowing the points system
Many cards accumulate points for each purchase and these are used to redeem different benefits. Even, many are associated with airlines to accumulate miles for a certain amount of purchases made by the user. Find out about the benefits that your card gives you so you can take advantage of them and make the most of the points system that corresponds to you. It may be that you have many accumulated points and want to use them before they get lost.
Always pay the minimum
If every month you make the minimum payment of the fee that you had to cover, it takes a longer time to cancel the debt, which causes the interest to produce an even greater expense. Always seek to pay the total debt each month and if this is impossible, cover at least ¾ parts of the total payment.
Request a cash advance
Studies prepared by Sernac confirm that, given the need to obtain cash, it is better to request a personal credit than a cash advance from your credit card. It may seem like an easy and fast way to get the money you need, but when you return it you will find yourself paying a higher percentage to the interest you would pay for purchases in installments or for a personal credit.
Not knowing your credit conditions
If you do not know what the interest rate the card gives you, what are your benefits or when is your cut-off date, then you need to start knowing that data in the shortest possible time. Search for information on your bank’s website or contact an advisor. Know how much they charge you for late payment, how much it costs to send the statement, how much is your line of credit, etc.
Remember, in addition, that it is always good to have the options open since the institutions are willing to offer different benefits, including a low management fee or even the elimination of it. For that, you can use the Jenny Thompson credit card comparator (here) and see what other banks offer you, in case you are thinking about changing your credit card.