How do you use your credit card? When used well, it can be an important ally to help your cash flow and make your daily finances much easier, eliminating the need to always carry some money. How about a quick analysis? It only lasts 1 minute!
Okay, maybe it will last a little longer, but not much. Take a look at the points below and get a better understanding of your credit card status.
1. How many credit cards do you have?
The ideal would be to have only 1 credit card. With this you concentrate utilization, increase the total value of purchases and thus you are more likely to bargain the payment of lower fees and gain more advantages. After all, for the card company, the more you spend, the better.
In some cases, especially for business travelers, it is interesting to have a second card from a different flag. This is because certain establishments may accept only one type of flag, and increase their total credit limit in case of emergencies.
But if this is not your case, it will hardly be necessary to have several cards. Choose the best of them (with lower rates and higher advantages) and cancel all others.
2. Have you paid your credit card in installments?
A good indicator of good card usage is that you always pay your invoices on time, in full. If you have to use installment payments, it means you spent more than you can afford.
There are no major problems if this occurs sporadically in the event of an emergency or additional expense required. But be aware of this indicator and turn on the red light if installment payment becomes a routine.
3. Are you heavily in debt?
We are talking about debt and not delinquency.
Debt measures how much debt you have. For example, if you purchased a new television in 10 installments of $ 250 and only paid the first installment, your debt is $ 2,250 (ie 9 x $ 250). Even if you’re up to date with your benefits, you’re still in debt.
Credit cards allow us to take on new debt without us realizing it. As the installment purchase process is very simple, without major credit or registration analyzes, the impression is that there was no financing. But when splitting a purchase “10 times on the card”, remember that you are in debt.
Try to sum all the debts you have, that is, all that you still have to pay on the card. As a general rule, this total amount should not exceed 20% of your total salary. Well, this percentage can vary greatly according to your other expenses, so it’s just a reference.
Track the total amount of your card debt and keep it always decreasing, not increasing.
4. Teach your children how to use the card well.
In the past there were no cards and we only used the cash or check. In the future, there may be another even more modern way to shop.
So do not be afraid of the card. Teach your children (or relatives, or friends) how to use the card well. And enjoy!