Everything is based on trust. A financial institution grants you a credit assuming, for your credit history and your income, that you will be able to pay it at the end of the month.
Here are five tips to make good use of your credit card in an intelligent and responsible way. So, over time, you can increase your credit limit.
1. Make your payments on time
There are attitudes that are learned as children and then we understand that they are essential for adult life. Well, here it is about “delivering the task on time”.
Not paying your credit card on time can mean not only that you must pay interest, but the possibility of losing certain benefits associated with your credit card, such as lowering the interest rate.
In addition, not complying with your payments could damage your credit history, which implies that you could face certain obstacles in the future when you intend to request a new credit of any kind.
2. Do not get carried away by the minimum payment
The following could be summed up in an old saying: “Do not leave for tomorrow what you can do today”
Each month, credit cards allow you to pay a minimum amount over the total statement, which prevents you from being charged late payments the next month or losing your benefits. This can be useful when you don’t have enough money or have a tight budget.
But be careful, because the accumulation of debt for several months can bring problems to settle your account. By the way, according to the National Commission for the Protection and Defense of users of Financial Services (Condusef), 52% of Mexicans who have at least one credit card usually only pay the minimum, which results in more than half Cardholders pay default interest .
3. Set up automatic payment
This function is special for the forgetful. Automatic payment is a pre-programmed payment of your credit card in which you can set a fixed or variable amount.
If you think you can forget to pay your credit card balance each month, this will help you get organized. The credit card will debit from the bank account that you associate the amount determined by yourself, either the minimum payment or the total payment.
It is important that you make sure that your account will have enough money to cover your credit card balance.
4. Consider term payments
Those who make better use of credit cards are those who can plan ahead and organize their expenses. When you make a purchase in installments or months without interest, the cost is divided into multiple small payments – and proportional – to be canceled every thirty days until you finish paying the total amount.
Sometimes, this generates a false perception that the credit is unlimited or that your ability to pay is unlimited. Because suddenly you also have direct debit expenses, such as the streaming service to watch your favorite series, the gym ticket and the public services. Then, one day you find that your monthly expenses are disproportionate.
When using a credit card, it is smart not only to think about your ability to pay in the short term but also in the medium term, anticipating future payments already made.
5. Pay attention to the type of rewards
Some credit cards offer rewards every time a purchase is made, either as reimbursement for purchases or sum of miles for travel. In general, credit cards charge a monthly fee for these benefits.
The best rewards card is the one that suits your needs and the one that offers you the benefits you really take advantage of; otherwise you will end up paying fees for services you will never use. For example, if you don’t travel a lot, it makes more sense to have a card with benefits to use in everyday life, such as shopping in supermarkets.