How to take advantage of credit cards even in times of expensive rates?

Economic conditions are becoming increasingly complex and this has prompted central banks in various countries to raise interest rates in order to reduce consumption and therefore the escalation of prices (inflation).

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This requires more attention and responsibility with credits given the high interest rates. Bloomberg Line has consulted with experts to give you some tips on how to take advantage of credit cards even in times of high fees.

Advice

Germán Machado, professor of economics at the Universidad de los Andes, presented the following recommendations:

• Buy for a fee.
• Know the expiry date of the card.
• Pay the full balance before the court date.
• Use the card to purchase products that offer interest-free deferred payments.
• Don’t make cash advances.
• Apply for an exemption from the handling fee.

For their part, RappiPay experts shared the following tips for making the most of credit cards:

• Establish a budget: Organized finance is the first step in mitigating the impact in times of high rates. Make sure you include all expenses – fixed and variable – in your monthly budget and make sure they don’t exceed your income, otherwise you will be at a disadvantage.
• Prioritize your expenses: Although many experts advise against using credit cards in times of high rates, for many Colombians these are the only financing tool they have. Use it, but responsibly: try to pay off your debts before incurring new expenses. Prioritize fixed over variable expenses.
• Change the rates of your purchases: In an ideal world, it would be better to avoid interest by paying everything in one installment. However, it is often necessary to finance purchases to purchase products or services that would otherwise be over budget. Therefore, while it seems counterintuitive, it is more responsible to make purchases at higher installments, so that the monthly payment falls within the budget. This way you will avoid going into arrears.
• If you absolutely want to buy a Play Station, there’s no point buying it in one or two installments if it doesn’t fit your budget. Paying it in 12 installments, although it involves higher interest, allows you to pay less monthly and have more cash in case of the unexpected.
• Change your fee: Once you have a clear budget, adjust the quota on your card to avoid falling into the red. In general, it is good to be able to adjust the share to your debt capacity, in this way you will know the maximum value for which you can borrow.
• Discover the advantages of the card (and use them!): Commonly, the interest rates on cards are similar. A good way to decide which card to buy or use is to look at the benefits it offers. Make sure you don’t inadvertently pay driving or insurance fees. If you are paying a handling fee, create an annual account of the money you are delivering to your bank for this concept. Is it worth it?
• Resolve doubts with your financial institution: Choose the financial institutions that offer the best customer service. It is normal to have questions or concerns about your credit card and the most important thing is to have faith in your financial institution, to have the opportunity to speak to an advisor who will guide you and help you resolve your doubts. Nobody wants to spend hours on the phone, much less having to queue.