Credit Cards - Yes or No?

Elaine King

Credit cards can really support your personal finances, but they can also become a real headache if you don't use them well. Using credit cards well involves various aspects, such as not spending more than what you can afford and always paying within the deadline to prevent default interests.

But an important step in credit card management is selecting the right card. Knowing the different options, costs and deadlines before deciding which card to use is useful advice so you can select the type of card that best suits your needs and possibilities. The options vary greatly and you can choose one depending on the use you want to give it. Here are a few of those options:


Credit cards are mostly used to make purchases. You can purchase several items, pay in installments and have better liquidity during the month by using your line of credit. If you pay the full balance of your card every month, you can use it to do your everyday shopping and improve your credit history and earn benefits such as reward points and other promotions. This decision (of using your credit for everyday things or not) will depend on you evaluating your chances of paying on time and that you’ll really never miss a deadline because default interests can be really steep. You can also select the option of paying in installments by dividing the amount of your balance in several parts and paying a relatively low interest rate.

Cash Withdrawals

Withdrawing cash from your credit card should be an option that you use only in extraordinary cases. Having the card can give you the peace of mind of having cash in an emergency, but the interest and withdrawal fees can be extremely high. If you need cash for a larger project, applying for a personal loan that offers you a better interest rate is preferable.

Debt Transfer

You can pay off the debt you have in a credit card by using another one. This is useful after evaluating different options and making sure that the interests are lower in the new account. You can save a lot of money with this very simple step. There are consultants in financial institutions that can give you all the relevant information for this type of operation, and it's advisable to consult them before making a decision.

Market conditions change every month and staying informed is key. Remember that credit cards carry a great responsibility and you need to be disciplined and stay within the limits of what you know you can pay so you don't end up in huge debt.

How to make your payments?

There are usually three payment options. The first one consists of making the minimum payment (almost always in interests). The problem with this option is that the debt will continue to grow and the period of time to pay it off may last for several years. The total payment option has the enormous advantage of not generating interest and it also gives you a better credit history for future projects. You can also choose to consolidate your debt. This means that getting a personal loan with lower interests and using it to cover a part of your debt, reducing the default interests, is best.

Knowing how to use a credit card is important. Make sure to share this knowledge with the entire family, especially with children, since it will prepare them to manage their credit history when they become adults. Remember that sharing the activities related to finance management will help form their sense of responsibility and they'll understand the value of money in a better way.

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Elaine King - Family and Money Matters™ 2021