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How to get out of credit card debt

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Credit cards are of great help when making different purchases, since they can be used at any time. Having a credit card allows its users to take advantage of its advantages, such as creating a credit history.

According to the financial coach Andrés Mórtola, the proper management of a card allows obtaining financial benefits, “that is, they lend me, and I pay them back at the end of the month, if I pay on time, without paying interest.”

Those who handle this type of document must be clear about the difference between cut-off dates and maximum payment dates. The first refers to the period of one month in which the card issuer closes the expenses that were made, this period of time is 30 days. The second refers to the date on which the client has to pay a minimum amount, generally 15 days after the cut-off date. In case of non-compliance, interest must be paid for late payment.

Andrés Mórtola, financial coach, points out that it is possible to take advantage of both dates. He recommends the maximum use of two credit cards with different cut-off dates, but if he does not know how to handle them, it is preferable not to have them.

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“The key is that one card has a cutoff on the 30th and another the cutoff on the 15th, although they may have days other than these, the intention is that there is a difference between 10 and 15 days each,” he adds.

How to get out of debt

Stop using your credit cards. Even if you have more than one credit card, it is better not to have them within reach for a long time. If you can no longer exempt yourself so much, have only one in your wallet.

Do not let the debt continue to increase. Continue paying “what you can” is not a good decision, because the amount that is not canceled continues to generate interest and consequences.

war economy. The goal should be to pay off the debt. For that, the family or personal budget must be adjusted to its maximum expression.

Tips for the use of plastic money:

  • Review the account statement always and in detail: Every month, financial institutions send a summary of the account, either physical or digital, which compiles all the movements made. “It must be organized according to your budget, so that the plastic money is used according to what was planned so as not to exceed the use of the money I have,” says the dean and professor of Finance at Universidad del Río, Francisco Parodi.
  • Save all payment receipts: This is a good practice to keep track of accounts. It helps to have real proof of what is reflected in the account statement. “Having the receipts allows us to analyze the situation, review expense by expense, penny by penny. Make use of the new tools offered by banks to make a comparison of the expenses they make compared to previous months”, adds Parodi.
  • Analyze expenses with the support of specialized digital tools: This practice is very important since it allows you to identify how money is being spent, which areas or types of expenses take the most money and if they are fundamental areas or are unnecessary.
  • Plan future expenses: Once consumption patterns have been identified, it is best to define a personal and family budget. “It must be defined whether a higher savings capacity can be generated and a more efficient use of resources can be achieved,” says Parodi.
  • Do not lend the debit or credit card: In Ecuador it is common for people to lend their card to family or friends to make purchases or withdraw money. It is important to consider that the card is for personal use.

Benefits of plastic money:

  • A large percentage of large and medium businesses, gas stations and deliveries have digital channels. “There is no need to find large amounts of cash, even more so in the face of insecurity when going out. Also, in this context, it reduces the chances of contagion against the coronavirus, ”says Parodi.
  • Electronic money allows safe transactions over the internet. “This safeguards physical security, since it is not necessary to go to a commercial premises, bank, institution, etc.”, says Arellano.
  • It allows to have a detailed control of the operations and expenses made per month. According to Francisco Parodi, this in turn gives the option of stretching the monthly budget, since it is possible to play with the payment dates that credit cards have.

Recommendations for managing multiple credit cards

– Always pay on time: Reminders or alarms can be used to pay on time and avoid inconveniences; using online banking can help.

– Not using all available credit: The ideal will always be not to use more than 30%.

– Have the necessary knowledge to manage a card: At first, try only to have a credit card to learn how to use it; after about twelve monthly billing cycles, you could request another. (I)

Source: Eluniverso

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