A few weeks after celebrating the Christmassurely many people will use the credit card to make purchases for this date. The finance professor at Pacífico Business School, Jorge Carrillo, provides some recommendations to make effective use of plastic money.
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1. Don’t have too many cards. It is recommended to have one or two cards at most, since an excessive number could mess up the control of your expenses, generate membership charges, and increase your “potential debt” (greater risk in the financial system).
2. Pay your day-to-day expenses with the “direct credit” modality. Cancel everything at the end of the month, so you can take advantage of the card’s promotions and discounts, in addition to accumulating miles or points from the benefits program and not having to carry so much cash in your wallet.
3. Know your cut-off date or billing cycle. If you handle this concept well, you could defer the payment of a consumption for up to almost 60 days without interest, in the case of consuming the day after the cut-off date.
4. If you are going to make a significant consumption, analyze whether it is better for you to split it with the card or it is better to request a personal loan. The average interest rate on the card for fractional purchases in establishments is more than 65% per year, making it very expensive if we compare it with a personal loan.
5. If you have already made a “split” purchase with the card, avoid paying only the minimum payment. If you pay only the minimum, your debt could last for several years, generating higher interest. It is best to pay everything in a short time.
6. Avoid using the card’s cash provision. The interests in this modality are the highest in the financial system, with an annual rate that exceeds 90% on average, so it should only be used for emergencies.
7. Be careful with using your card abroad. If you buy in a currency other than the sol or the dollar, you may be charged a “currency exchange” commission, in addition to applying an exchange rate that does not always suit you.
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