Plan your debts: How to use your credit card effectively
November 28, 2019
What should I use my credit card for? This question has different answers and it is difficult to explain a unique answer when many of us have different lives, and for each one we use the different credit card. The reality is that the credit card is a double-edged sword, and if we don’t know how to use them properly we can end up in a situation in which we may not want to see each other. I hope these tips help you identify how to improve the use of your card and leave a comment at the end about your suggestions or reactions:
If you are going to use it, have a plan to pay for them
As Ricardo Arjona says, the problem is not that you use it … The problem we have is that we use the credit card regardless of how or when we are going to pay them. Before making a purchase, just think about how long you want to last to pay the bill. A card is very timely to buy flights on offer, gifts for parties, etc. If you can pay them with a plan, this does not have to be a problem.
An example: If you spend $ 600 dollars on a new computer and pay with your card, think about how to pay for the computer before buying it. You can tell yourself: I want to pay it in a year! Divide the $ 600 for the 12 months, and you will have the amount you need to pay each month. It is true that this does not take interest into account, but this is not the problem, but the person ends up paying the minimum ($ 20 dollars) without thinking how much he will take to pay them.
Do not buy your needs or monthly expenses with the card
If you buy something with your card that you should be paying with your salary, you may be in trouble. You should not pay your cell phone, cable, food, rent, etc. with borrowed money (the credit card is borrowed money) because this should be covered with your monthly income. If you had a temporary emergency, and you’ve already used up your emergency fund, you could use the card to get you out under a truck. But if your income has decreased and you can’t recover it for two months, you should think about your priorities and start canceling services that you can’t really afford anymore.
This has an exception: Points card. If you have a miles, rewards, etc. card You can use the card to pay all your monthly expenses and thus accumulate points, but this only works if you have the full money to settle the account at the end of the month. If this is not your situation, read the first paragraph again.
If it is a temptation, close it
It is true that a closed card can lower your credit score. But if this has become a temptation to spend, you should cancel it so you don’t have this odyssey. Your score may decrease now, but in the long run it will help you keep your score high and your debts to a minimum.
You don’t have to use them to keep them open
Many people believe that you have to use your credit card every month, or that you should have a balance to pay to keep them open, and this is not true. You can have an open credit card without using it. It is true that it can be closed, but will not stop using it for three months. To keep it open and no balance, you should buy something small, and before the monthly cycle is completed you should close it.
Not all card offers are good
Do not take credit cards just by having them, having many open also damages your score. You should have no more than 4 or 5 cards, and even that amount is a lot.