6 Tips for Responsible Credit Card Use at the End of the Year
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- Make a budget.
- Pay on time.
- Monitor your consumption.
In Mexico, the COVID-19 pandemic practically forced the use of new payment alternatives for people, including access to e-commerce platforms for the purchase of essential household items and also for the hiring of financial products and services. So it is very attractive to have a mechanism with which you can purchase goods or services online, especially during the closing season of the year, in which expenses and purchases increase considerably. One means can be the use of a credit card, however, if it is not implemented responsibly, it can ruin your financial stability.
According to the National Commission for the Protection and Defense of Users of Financial Services (Condusef) , the use of credit allows you to face emergencies, enjoy goods and services if you do not have liquidity. You can even achieve savings, make investments or start businesses. However, its use should be moderate and based on your income, since it is not an extension of your salary but a vehicle to manage consumption and plan purchases.
José Manuel Piñera, director of credit and compliance at Cumplo México, states that “in theory, having a credit card is always recommended because it allows you to have a better credit history, access loans and carry out online transactions; unfortunately in our country it is necessary to promote financial education so as not to exceed financial capacity and fall into difficulties to cover the debt ”.
In this regard, a study entitled: " Financial Literacy Around the World " by the World Bank and the George Washington University School of Business, reveals that in Mexico only 32 percent of adults have adequate financial education. Given this scenario, if you have the concern to ask for your first credit card or do not have the necessary keys to know if you are ready, the specialist shares the following recommendations:
1. Make a budget: consider, plan and make a plan to determine a consumption limit that you can make and not exceed, so you can better monitor and control. Remember that knowing your finances carefully helps you to know your expenses, take better control and be able to reduce or even eliminate your debts.
2. Pay on time: locate the cut-off dates and the payment amounts of your card, it is best to pay off the total payment specified by your bank each month, so that you do not affect your credit limit, or have debt with him, so, save the reminders in your calendar and avoid delays or penalties. It is possible that you can be late, just keep in mind that if it is sporadic, you will have to pay the respective interest.
3. Monitor your consumption: frequently enter your banking apps and request notification of your operations.
4. Use secure connections: consult your operations in a trusted place and connection, avoid using Wi-Fi on public networks.
5. Avoid the minimum payment : the most effective way to settle or maintain the order of your finances is to avoid the minimum payment, thus avoiding the credit bureau and maintaining the validity of other credits, if in the future you request one.
6. Avoid cash withdrawal: look for other options such as a personal loan that you can pay from other income you have, since the cost of withdrawing money from your card is very high. It is recommended that the cost of the card does not exceed 30% of our income.
Another factor that you cannot forget before deciding to have a credit card is the reason why you want to process one, such as emergencies; situations such as illnesses, unforeseen accidents, where it is required to cover medical fees, hospital expenses, or automobile accidents. Likewise, they can be used for promotions, since sometimes, when paying with a credit card you can get discounts, payment plans and even months without interest. However, keep a constant eye on your movements.
To conclude, the manager mentioned that "the best financial decisions are made at the beginning with the collection and analysis of information, also using slow, careful and analytical thinking, so generating healthy finances that involve savings is an experience that takes time and time. involves a learning process. "
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