Do you have a credit card? This is the smart way to use it

Content sponsored by Servibanca to promote financial education.

The Financial Superintendence of Colombia indicated that the number of active credit cards with cut-off as of July 31, 2023 was 15.3 million, compared to the 15.9 million active cards registered at the same cut-off last year, which shows a tendency of Colombians to cancel their cards.

One of the main reasons why this trend is occurring in 2023, according to analysts, is the collection of interest. Therefore, it is important Learn to handle plastic money cautiously and intelligently.

1. When accepting a credit card from a financial institution or chain store you must have clarity about the approved quota, the interest rate that the card issuer will charge when deferring purchases and the handling fee that must be paid to use or have the plastic.
2. Maintain control of total debt, especially in cases where the credit limit is high, since the installments can easily exceed the monthly income. It is okay to use the quota, but with good management, so that it provides positive information to the credit history. This is achieved by calculating that the card fee, added to the fees of other credits, does not exceed 30% of monthly income.
3. Do not use the credit card for purchase of essential goods and services or usual expenses, such as groceries, gasoline or entertainment. If it is absolutely necessary, you should try to make the purchase in a single installment to avoid paying interest.
4. When paying the monthly credit card fee, it is ideal pay an amount greater than that suggested by the financial institution as a “minimum installment.” This will provide greater control over personal finances and reduce the interest payable.
5. Enjoy the benefits that credit cards give: accumulation of miles or points, discounts, promotions, assistance or cashback, among others. In addition, have the benefits of cards when making purchases online, such as insurance or ease of claims.
6. When identifying liquidity problems to pay the credit card fee, it is important go to the bank to redefer the balance and avoid default, which can generate higher costs.