Make your credit card your best ally

June 10, 2015

Credit cards are a payment method that allows you to shop now and pay later. It is important to learn to manage it efficiently so that it does not become a concern. Proper use will provide greater security because it is more convenient to carry “plastic money” in your purse rather than cash. If you lose your cash, chances are you will never recover it. However, if your credit card is lost, you can call the bank to cancel it immediately.

Here are some tips for managing credit cards:

Define what you need: Before applying for a card, check out the benefits and services they offer. There are a variety of credit cards, know your options and determine which one suits your needs according to its benefits and costs.

Assess your line of credit: financial institutions are responsible for assigning a credit line based on your income level and your debt paying behavior. Verify that the credit line you obtain will not exceed your ability to pay.

Control your impulses: a good way to manage your credit card effectively is to not spend more than you can afford. This will help you maintain a balance that is easy to pay off and it will allow you to have your line of credit available in case you need it. Set a monthly budget and do not overdo it, you can use My Bank alerts to receive notifications when you arrive at the limit of your established budget. When you exceed your ability to pay off your card you are feeding a debt that will increase gradually and it will be very difficult get rid off.

Pay your monthly minimum payment: one of the benefits of having a credit cards is the opportunity to pay installments. Check your monthly minimum payment and pay the amount on the statement or a greater amount to avoid falling into default if you do not have the money to pay off the monthly balance. Remember that if you limit yourself to make the minimum payment each month it will take you longer to pay off the debt.

Beware of cash withdrawal: if you are going to withdraw money from your credit card, you have to take into account the interests of this type of transaction is different from those who apply to purchases. Try to limit this and use it only when necessary, to avoid higher interest.

Avoid falling into debt: if you already generated a substantial debt, reevaluate what is your ability to pay and contact your financial institution to look into alternatives to refinance that debt. You could set up a payment plan with a lower rate. The most important thing is to address the situation in time and avoid defaulting.

Good credit management is crucial for a good financial health. Take the necessary measures to avoid it from becoming a problem and turn it into your ally.