The credit card is today an almost indispensable financial tool. For online shopping, in particular, it has become almost mandatory on many websites. However, the ease with which it allows you to postpone payments can become a trap if not used carefully.
How credit cards work
According to the website specializing in economics and finance, Ekonomista, the first step to using it correctly is understanding how it works. Unlike a debit card, the money does not leave the holder’s bank account immediately.
This is a temporary loan granted by the bank, which must be repaid in full or in part, with the possibility of interest being charged. According to the same source, this mechanism allows, for example, the purchase of an electrical appliance before receiving the salary, without additional costs if the invoice is paid in full on time.
The problem arises when payment is delayed. Interest can increase quickly, and the debt can become significant. To avoid surprises, experts recommend some discipline and financial planning.
Know deadlines and record expenses
The first step is to know the date on which the invoice was issued. Credit cards normally have a fixed cycle, and failure to pay on time will result in increased interest. Organizing purchases based on this date allows you to save some time before expenses become onerous.
Keeping a strict record of all transactions is another essential practice. According to the same source, writing down each expense helps to avoid discrepancies between the amount you think you owe and the amount that will be charged by the bank.
Pay attention to what you buy and limit yourself to one card
It is essential to be careful with what you buy. The credit card does not increase the budget, it just postpones the payment. Spending beyond your means can quickly result in higher debts and financial difficulties.
Experts also advise limiting yourself to a single card. Having multiple cards makes it difficult to control expenses and increases the risk of missing deadlines, which implies additional costs.
Do not use the card as a liquidity supplement
Finally, not using the card as a liquidity supplement is crucial. Withdrawing money with the card immediately incurs interest, as it is credit and not your own money. According to , this is a frequent error that contributes to the accumulation of unnecessary charges.
When well managed, a credit card can be a useful tool for organizing payments and facilitating purchases.
However, according to the website specializing in personal finance, following these five basic rules is crucial to ensuring that it does not become a financial problem.
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