Using credit cards to make payments and purchases is one of the preferred financing methods by Spanish consumers, as it is an easy and convenient way to get extra liquidity. However, these products are used irresponsibly many times and are the source of serious debt problems.
Therefore, before hiring and using a credit card it is advisable to advise what is the offer that best suits the consumption habits and know what are the various costs that you would have to face for the use of plastic.
How to pay less for your credit cards
Using a credit card to finance your purchases is very useful, but you can get more expensive out of the account if you do not use it responsibly. Next, we review, through the help of the financial comparator GiveMyCash, several keys that will help you not to overpay because of a card:
1. Hire credit cards without annual fees. First of all, it is advisable to hire credit cards that do not have issuance, maintenance or renewal fees, otherwise you could end up paying more than $ 30 per year for the plastic. In that sense, you must be careful with the products of some banks that are only free during the first year, since after that time you could be charged a maintenance fee.
2. Paying at the end of the month is cheaper than paying in installments. The method of total payment at the end of the month (or at the beginning of the following month) is the most convenient, since it does not involve the payment of interest. On the other hand, if you choose to defer payment in monthly installments, an interest will be applied that can be around 30% APR.
3. Beware of the APR of the card. Sometimes it can be difficult to return all the money used by a full payment at the end of the month and there is no other choice but to reimburse it in monthly installments. In that case, it is advisable to use a credit card that has a low interest rate of 15% APR or less. If you use the installment payment method we must be careful with the interest announced by the banks, since many times only the monthly interest rate stands out.
4. Never pay the minimum fee. Returning the debt little by little may seem very comfortable, but it is also very dangerous. If you pay very small monthly fees it will take a long time to return the used credit and you will end up paying a lot of money in interest. In the long run, it will always be more important to pay off the debt by paying higher monthly payments.
5. Take advantage of discounts and shopping returns. With discounts and bonuses on purchases that include some credit cards you can save a good pinch every month on purchases at restaurants, department stores, gas stations, etc.
Insurance, another aspect to consider
Free insurance that includes many credit cards can also be very helpful in specific situations. For example, some cards include travel assistance insurance that covers lost luggage, flight delays or accidents occurring abroad. Some products also include purchase protection insurance that will cover the damage to items purchased with the card or allow you to extend the warranty.