Banks make a lot of money from inexperienced users. There are several tips for using credit cards that will help users to avoid making costly mistakes.
There are many examples in countless companies where the misuse or abuse of a product can indirectly generate substantial profits for manufacturing factories. These profits are at odds with what might be ethically justified, and that is why they are so controversial.
- 1 Using bank cards
- 1.1 Don’t use the card to pay in installments unless it is interest-free and your purchase has a lifetime greater than the months it will take to pay for it
- 1.2 Avoid the temptation to have more than 2 cards
- 1.3 Never stop paying the bank card
- 1.4 Forget about cash withdrawals
- 1.5 Eliminate annual fees that become ant expenses
Using bank cards
To give some context, it is important to understand how banks do business with credit cards. As can assumed, banks mainly profit from the so-called financial margin. That is, the difference between what the bank pays the saver for having the money invested and what it charges the cardholders who have it on their credit card.
Here are some basic tips for using credit cards without risking financial and emotional stability:
Don’t use the card to pay in installments unless it is interest-free and your purchase has a lifetime greater than the months it will take to pay for it
While card rates in several countries are at 45% on average, it is clearly a mistake to finance purchases with this instrument. According to figures from the banking reports, 22% of card users pay the total, so 78% would be paying interest on purchases such as groceries, gasoline and other expenses, simply because they do not know how credit cards work and the applicable rates.
Avoid the temptation to have more than 2 cards
Handle a maximum of 2 credit cards, one for everyday expenses such as groceries, gas, phone, and pays balance in full at the end of the month. Use another card where the user have monthly plans without interest.
Remember that the greater the number of plastics, the greater the likelihood that a person will lose control and end up paying less than the full amount of their debt. This includes abusing the much-loved interest-free months.
Never stop paying the bank card
Forgetting the payment date not only has consequences that are reflected in late payment fees and late interest, but it is also very likely that the bank will assign the user a higher rate because it considers it more risky.
Forget about cash withdrawals
Many users think that it is the same to take money from a credit card as from a debit card and forget that they will have to pay a disposal fee of 5-10% of the amount disposed of upfront and then pay daily interest at a rate that is regularly even higher than the average card rate.
The higher rate charged, is done because banks consider more risky customers who are willing to get the money despite the irrational financial cost.
Eliminate annual fees that become ant expenses
Paying for benefits that are not justified or not used is perhaps one of the most frequent mistakes that users make out of inertia. Considering that there are credit cards that do not charge an annuity, it is important that users do an exercise to determine if they are getting tangible benefits from the annuity payment.