The same object that allows you to make dreams come true in gentle installments, can also be the cause of bad debt with your very high interest rates. After all, did the credit card come to help or complicate our financial lives?

How does the credit card work?

This is one of the most used forms of payment, not only in Brazil, but worldwide. It is so common to remove it from the wallet, pay installments and wait for the invoice, which we hardly stop to think about how the credit card really works.

Surprisingly, it acts as a loan mode , after all, when we use our cards, we have a period of up to 40 days until we pay what is being bought. During this period, banks or financial institutions have “lent” us this amount.

When we request a card, it always comes with a limit defined by the broadcaster. This limit, for the most part, is released based on your score (credit score), monthly income, among others… The limit is the amount that will be borrowed to you and represents the maximum amount that may be spent.

A common question about the limit is its operation is spoken of installment purchases: to the surprise of many installments must also be within the maximum established value.

For example: If today you have a limit released in the amount of $ 800.00 and makes a installment purchase, in 4x of $ 200.00, will be for 4 months with the limit committed to that same purchase until the end of payment .

Therefore, plan well the number of installments of your purchases if you need to use the limit in the future.

Why so many people curl up with the credit card?

63% of Brazilian families are indebted at this time.

Whether for the crisis or for reasons prior to it, this number scares us even more when we look at the cause of close indebtedness: of these indebted families, 79.8% has the credit card as a cause.

Although it is already very high, this number is in a growing curve over time: in the same period in 2019, the total of families debted by the credit card was 78.4%.

If the account is not closing at the end of the month, the card bill can be a great suspicion, as it is much easier to lose control over spending installing purchases than paying in cash or in debt.

When this happens, the option to split the invoice seems very tempting to us and that “pay the minimum invoice” button (usually 15% of the total amount due), shines our eyes. But it is worth remembering that this is where the famous interest enters, which revolves around no less than 300% per year.

To make matters worse, the average time of Brazilian families with the payment of late card invoices is greater than 3 months. That is, with each passing month, the calculation becomes interest on interest and here, we are talking about the highest on the market.

Imagine the snowball that this can turn?

What are the most common errors in the use of the card?

1- Do not predict spending within the budget

When we set up our budgets, we know how much the “home accounts” lines, “medical expenses”, “spending on education” cost us, but do you have a line just for card spending?

Going further: Today would you know what the maximum amount can be spent on your credit card without compromising other basic items?

Knowing how to answer these questions is a great way to avoid loss of control or need to split the invoice.

2- Having a limit that does not correspond to your financial reality

Having a high limit on the card is cool, but it may not correspond to your financial reality and be out of the costs you can bear right now.

As tempting as it may be the release of the balance, try to request a limit that helps you keep the invoice values ​​up to date. Up to 50% of your income is recommended, but think about whether this amount makes sense with your current expenses.

3- Lend your card

If you have everything under control and you know how much you can spend, but lend your card to someone, the risk of getting into debt remains loud.

Lending the credit card, even for friends or family, is such a common practice and so dangerous that we made a text just to talk about it, check it out here!

Remember that you do not need to lend the physical card: data such as card number, security code and expiration date, already guarantee a virtual purchase, so do not share them.

4- Delay the invoice

Whether for oblivion or lack of planning, stop paying the card bill on the due date is dangerous. Even if for a short time, interest will be charged.

5- Do not follow spending throughout the month

Follow the current value of your invoice daily and get to know your spending.

Sometimes we can have the false feeling that we do not spend so much that month and surprise us on the final value of the invoice. To avoid this, look for the apps or the website of your bank the amount of the invoice that is open.

How to use credit card to your advantage?

Now that you know the causes of indebtedness and the main mistakes made, it is easier to know how to use your card as an ally, right?

In any case, here are some more tips:

• If you want to make a purchase and know your budget well, you can install the value on the card so as not to compromise your entire income in a single month. Advantageous, no?
• Take advantage of scoring and loyalty programs: Try to know if your card entitles you to such programs, often the score allows us to get some personal and home items. But beware, it is worth comparing the value of the annuity (maintenance tariff) of the cards that offer this type of reward, with those who do not offer.

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