Master your credit card usage with this smart guide
While using credit cards carries certain risks, there's no need to eliminate them from your payment options.
Discover practical ways to make good use of your credit card!
By following the recommendations below, you will be able to use your card intelligently, avoiding risks and taking advantage of its benefits.
Check out the following tips to learn how to manage your personal finances:
Avoid lending your card
Lending your credit card can lead to financial problems. Many people end up with debt and a bad credit history because the loan was not paid by the third party.
Therefore, it is better not to lend your card. Remember that it is a personal asset and any inconvenience related to it will be your responsibility.
Even if it is someone you trust, think twice before lending.
Control your expenses
Technology makes it easier to track your spending. Many banks offer apps that allow you to monitor your purchase history, helping you record each payment and know how much you can spend in a month.
If your bank doesn't offer this tool, keep your expense report updated daily. Monitoring your payments will help you avoid unpleasant surprises.
Prefer cash payments
Paying in cash is usually more advantageous. In addition to getting good discounts, you will avoid accumulating debts.
Of course, there are times when paying in installments is necessary. For example, if your refrigerator breaks down and you don't have enough money, use your card, but divide the amount into a few installments.
Try to pay as few installments as possible, as interest can increase the total cost. Make sure the debt fits into your monthly budget.
Set an appropriate limit
To maintain financial control, adjust your credit card limit. Some lenders increase credit for good payers, but this can be risky.
Imagine having a limit of 8 thousand pesos with a salary of 3 thousand. The temptation to spend increases and the risk of indebtedness increases as well.
We recommend that your card limit does not exceed 30% of your monthly income. If it is higher, you will need to keep a tighter control on your spending.
Use a spreadsheet to track your disbursements.
Use only one credit card
Having multiple cards can lead to overspending. The combined limits can exceed your monthly income, causing you to make purchases beyond your means and making it difficult to pay off debt.
To avoid this, concentrate your transactions on a single card. This will make it easier to track payments and control your spending.
Pay the bill on time and in full
Never delay paying your credit card bill. Interest rates are high and small amounts can turn into large debts.
If the bill is high, it is not advisable to pay only the minimum and leave the rest for the following month. This leads to revolving credit, which also has high interest rates.
Lack of payment can trigger a snowball of debt, so always pay the bill in full and keep the limit low and manageable.
Create a financial plan
To keep your finances balanced, adjust your spending to your budget. The rule is simple: never spend more than you earn.
First, gather all of the family's sources of income (salaries and additional earnings) and be clear about how much money is coming in each month. This will be your income limit for the month.
Next, create a spreadsheet to record all your expenses. Write down the amounts for each invoice and receipt.
This control will help you visualize your fixed and variable costs. If you find it difficult to use a spreadsheet, there are other financial management tools, such as apps or even a notebook.
Also set a savings goal. For example, cut back on non-essential expenses until you have saved 20% of your monthly income.
This amount should be allocated to an emergency reserve.
Take advantage of the benefits
Credit cards often offer loyalty programs. Each purchase accumulates points (or miles) that can be redeemed for products or services, such as cosmetics, tickets or discounted airline tickets.
However, be aware of potential pitfalls. Some partner stores may inflate prices.
Additionally, some mileage programs may have additional costs. Do the math to see if the benefits are worth it.
