Personal finance: Follow these tips to use credit cards without paying excessive interest | Economy

The use of one or more Credit cards It is a matter of financial responsibility. These may be under control or represent a headache when administration is poor.

On the use of these plastics and the interests they generate there are several myths, but … how to use them correctly?

"The use of Credit cards It allows people to make their purchases or have money when they do not have the cash present, making a future promise of payment based on the income they will have. It is important not to borrow above 30% of the salary, ”said Sergio Soto, marketing manager of Equifax.

According to data from the credit bureau as of June 2019, people aged 18 to 24 years have an overdue debt of 6% of the total debt, compared to people aged 25 to 34 and 35 to 49, whose overdue debt is 4%. These levels have been maintained in recent years.

The executive indicates that a false myth is that banks live on interest and therefore prefer to have heavily indebted clients. According to him, this is not the real situation since the most indebted clients generate greater expenses to the banks themselves. These entities should not expand their delinquent debt portfolios.

Then, Equifax It presents five recommendations for using your credit cards without paying exaggerated interest.

1. Read your statement. It is important to take some time and analyze your statement. But, if your time is short, visualize the most important data: the payment date, the minimum payment and the total payment. Canceling the latter will allow it to not generate more interest.

If your time permits, it is a good memory exercise to corroborate each expense line you have generated.

2. Differentiate cutoff date and payment date. What is your cycle? It is a question that few understand and that refers to the billing cycle, that is, the period of registration of purchases made. The cut-off date is the end of that period and the payment date is the last day of payment. Failure to comply with the latter, interest is generated.

3. The secret of the court date. The users of cards They usually wait a day after their cut-off date to buy. What is your secret? Because they have more than 30 days to cancel that debt until their next payment date.

Eye: Responsible use is important again, because consuming your credit line too early will take away room for action later or in an emergency.

4. Credits for the short and long term. It is recommended to distinguish your consumption in different credit products. For example, cards for short-term payments: eating in a restaurant, going to the movies, paying for taxi or scooter applications are expenses that are consumed as soon as you make them.

It is not recommended, for example, to put the lunch you will eat today in three installments. Meanwhile, there are debts that help to grow, to achieve a desired goal. They are long-term payments, such as an international MBA, land, renovation of furniture or dining room, a single apartment, a family car, etc.

These payments can be made in time through a loan of free availability or another specialized and long-term credit product.

5. Review your credit report. It is advisable to check your credit report every three months. This implies that four times a year you will have an accurate picture of your debts not only financial, but also of services. Additionally, you can access the report of third parties with whom you do business.