How do I use credit card?

 

For some, a credit card can be a beloved tool or a curse. You acquire it and often have that generous limit to use for online purchases and in your daily life.

To discuss how to use a credit card correctly, we need to look at what a credit card is: a credit card is a piece of plastic filled with technology that allows you to access credit or money from the bank, which then becomes your responsibility to pay back for the expenses you've incurred with it.

One of the great dangers or benefits of a credit card is that the credit readily available on it can often be much higher than your monthly income. And that's where the problems we'll address on how to use the credit card lie...

Let's start with a philosophical but practical aspect of your purchase profiles: immediate or spot purchases and installment or durable purchases.

Immediate Itens.

Immediate or spot purchases: I like to think of spot purchases as those that we consume immediately, such as grocery shopping, fueling up, a trip to the bar, or utility bills like internet and electricity. Generally, these items will not last months to be consumed. Therefore, it wouldn't make sense to spend 2 or 10 months paying for these types of items.

Durable Goods.

Installments or Durable Goods: Installment purchases are those intended for the acquisition of goods considered durable, which can be consumed over months, perhaps even years. For example, a lawn mower, tools, a laptop, a car, a set of pots and pans, etc. You can buy them outright, but it would make a lot of sense to spread these expenses over time.

Should the above reasoning be a rule?

Not always! This is just one way to facilitate understanding of how to use a credit card, but it is your financial organization and opportunities that will tell you the best way to use your card. Maybe you are financing immediate consumption purchases at the market, but if this is a way to allow your financial organization, then all is well. But if you are doing this routinely, be careful!

If you use a credit card for all your monthly expenses, then it is interesting for you to keep in mind what monthly expenses you can assume and what surplus you can take on in installments for the acquisition of durable consumer goods.

And of course, there will be details that can change the dynamics mentioned here, such as a financed acquisition of an item that will provide savings in some way, or a great discount provided by paying upfront.

In the end, financial planning is very important, and if you have or wish to have a credit card, pay attention to a few more aspects such as:

• Card annuities;
• Benefits and rewards that the card provides;
• Always aim to pay the full amount of the card;
• Look for suppliers with good customer service;
• Monitor your expenses.

 

A credit card is an excellent tool, so use it wisely and always do your research before acquiring.