Credit card: hero or villain?

When used well, the credit card becomes an ally and helps you a lot. But when used wrongly, it will create a debt that is hard to pay.

October 21, 2022

Redação N26

N26 Brazil credit card

Credit or debit? It depends. There are people who just think about credit cards and already feel anxiety. For other people, there is no other way to pay.

But who defines if the credit card is the hero or villain of your bank account is you. If you use it wrong, there's no one to save. But if you have planning and organization, there is nothing to fear.

Why are so many people afraid of credit cards?

It is very easy to have a credit card. You register and receive it on the next day, with an available limit. That's why there are more than 130 million credit cards in Brazil.

But easy doesn't mean cheap. It's not uncommon to see someone losing control when using their credit card. Consequently, 85% of people's debts come from it.

Is using the card for everything worth it?

The credit card is another tool available for your financial planning. Using it responsibly - with fincare - it can save you a lot of trouble. But it's not for everything.

Credit card, personal credit, vehicle credit, housing credit, etc. are different things, created for specific purposes. Using your credit card to pay for home renovations or asking for a personal loan to cover your overdraft are choices that are likely to leave anyone in debt.

How to use a credit card with planning

The credit card is important for those who want to spend without compromising their cash flow. If you have the money to pay the bill at the end of the month, that's fine. But it's also worth keeping an eye on these tips:

Know all your credit card fees

Did you know that the taxes of a credit card can be higher than those on a personal loan? That's why, while it sounds easier to use, it's important to know all the fees that may come with your card.

If you do not pay the bill on the right day, for example, you will face a late fee, which can reach 2% per month, and late payment, which can also vary, reaching up to 1%.

In addition, when you are late or pay only the minimum, the amount of the missing invoice enters the revolving credit. Its fees rates can reach up to 20.99% per month and 883.95% per year.

It is also worth checking in your contract if you pay fees for annuity, issue a duplicate card, withdraw, use it to pay bills and request an emergency credit limit assessment (when you ask for an emergency limit increase and they charge you for it) . All this weighs.

Limit is an exception, it's worth using less

"I earn BRL 8,000 per month: BRL 6,000 in salary + BRL 2,000 in card limit." It's a common joke, appearing with different values ​​everywhere. Behind it, an idea that leads many people into debt: if there's a limit, it should be used.

But those who do good financial planning know that this is not the case. The limit is there for a reason and it's a good ally, but just because it's there doesn't mean it should be spent every month.

When putting down on paper how much you intend to spend monthly, try setting a lower limit than the "official" credit card limit. It can help.

Have your limit value saved

Likewise, if you need to use it, you will have to pay. And the best way to ensure you have contingency coverage is to have your credit card limit value stored somewhere.

This is a good way, by the way, to start separating money. If an emergency reserve still seems difficult, try to leave the limit value there, still. It will give you a boost.

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