Credit cards can be more than just a convenient and secure alternative to using cash or debit to make purchases, as bank plastics can be a useful tool to help you manage your finances and build your credit history.
Depending on the credit card you can obtain, it is possible that the product offers protection against fraud and purchases not made by the holder; Unlike cash that can be lost or, in the case of debit cards, if it is stolen, it can be misused. So what is the best way to use a credit card?
Strategies on how to use a credit card like an expert
- Define the usage. One of the first steps is to know what you are going to use your credit card for. This is important, since in this way you will always have control of expenses , as well as being able to better define when to use it.
- Always keep in mind the payment date. Forgetting the payment date is one of the worst mistakes you can make, since it can lead you to have to pay interest, penalties and collection costs. To avoid this, you can put reminders on your cell phone or anticipate payments.
- The importance of CAT. Total Annual Cost, or CAT, is a benchmark measure of the cost of money financed for a year of use. That is, how much does it cost you to ask for money and how much will the total charge be including commissions and other charges. It is not only important to know the interest rate, but everything that surrounds credit. Knowing the cost of CAT will help you to properly use the credit cards you may have.
- Look for deals. The stores, in their different formats, have different prices depending on the payment method. A digital or physical store can offer to buy in months without interest , promotions or special discounts when paying with a credit card.
- Use the money without interest for up to 50 days. Credit cards have a cutoff date of around 30 days. And the bank gives you about 20 days to make the payment. If you make your purchases the day after your cut-off date, you can finance yourself for up to 50 days, without any interest charges if at the end of the term you pay the total debt.
- Finance your debt and make the payment in installments. When you cannot cover all of what you have used, you can make a payment known as the “non-interest bearing amount” that is not the total, but it is what you have to pay after 50 days of credit. If this payment is not possible, there is the minimum payment, however, doing this generates interest. The ideal is to make payments above the minimum and stop using the card as much as possible, make the payment in installments, as it is the way to avoid increasing the debt and damaging the credit history.
- Benefits of digital cards. Knowing how to use a digital credit card is very helpful. The cards have their digital versions with CVV codes that expire after use for maximum security. In addition, you have the option of turning it off and on before using it to give greater security in its use. You can also put a maximum in your expenses, so that it will not allow you to go over the amount you have chosen.
- Save your purchase receipts. This is a good way to keep track of expenses on time, along with reviewing your statement. Always review them and with them, prepare a budget so that in the future you can control your spending. Remember that to make proper use of credit cards, you must know at all times what you are spending on.
- Commissions for use abroad. When you travel, the best way to make purchases or expenses is with a credit card, as it offers many security advantages. Before traveling abroad, check what the applicable commissions are.
- Stay tuned for points and benefits programs. The use of credit cards is generally associated with rewards programs that you can take advantage of. Making use of these extra benefits is the best way to use a credit card.