Learn how to use your credit card risk-free

Users must be pending because all unpaid amounts will become debt and will generate interest at the time of the cut.

Credit cards have a wide range of services and benefits for their cardholders, they work like a pre-approved loan that can be used at any time. Now, all unpaid amounts will become debt and will earn interest at the time of the cut.

In order to adequately manage debt, it is essential to ensure good credit card management, which is why, in this edition of “Clear Accounts”, we will show how to get the most out of these products and manage them properly our finances, while using them.

First of all, there are several good practices and benefits that can be applied:

• Pay everything in one installment and online. By paying for all our purchases in the least amount of installments possible, we reduce the risk of over-indebtedness, as well as the risk of incurring higher and higher interest rates. And with respect to online payments, cards offer us the ability to obtain the same levels of security as physical purchases when making purchases over the internet, as they are protected against fraud and theft. And, if we have to make physical purchases, thanks to Contactless technology, the card does not have to leave our hands, allowing fast, clean and secure transactions.

• Know the benefits. It is very important to know the full range of benefits that our credit cards offer us. In addition to miles or cashback , there are other types of benefits such as restaurant discounts, travel insurance, theft insurance, among others. To make sure you know all of them, it is recommended to consult the page of the issuing bank or the intermediary, since both offer different types of benefits to cardholders.

• Payment of Emergencies. Credit cards can be used to solve emergencies, since they are more practical and safe than the use of cash. However, it is advisable to pay the amount debited from the card in one installment using the emergency fund. And in the same way, in order to achieve optimal management of these products, it is very important:

• Pay more than the minimum amount on the card. Regarding the payment of interest on credit cards, there is the possibility of paying the minimum, however, it is advisable to pay above this figure since considering the high annual interest rate in Latin America (about 22%) , you can end up paying up to 50% more than what was owed in interest. That is, instead of paying $ 1000, you would end up paying $ 1500.

• Avoid cash withdrawals. When making direct withdrawals, using the card, a commission is charged that can range from 7% to 10%, and if it is not paid, it will become a debt that generates interest, so it is recommended to reduce this practice or pay in a single fee said commission.

• Be careful with purchases or interest. When making large interest-free purchases in a given period of time, be it a month or ten, consider including these extra payments within the budget. Since, although an initial interest is not generated, by not complying with the payments, the normal interest of the card will begin to be charged.

• Avoid cessation of payment. Stop paying the credit card completely is never recommended, since, in addition to the regular interest, they will begin to charge penalties and interest on arrears. In the same way, your credit “record” can be affected. In case you cannot afford the payments, it is always recommended to seek a payment arrangement with the bank, before you stop paying.

• Budgeting. Now, the more benefits a card has, the higher the annuity charge or the handling fee, items that we usually do not budget for in the long term. It is important to include amounts such as the cost of insurance and annuities within the budget for better control.