:quality(70)/cloudfront-us-east-1.images.arcpublishing.com/elfinanciero/XRSANRY3TBDMHFYPYXDJ3SSDZY.jpeg?fit=%2C&ssl=1 "How to prevent inflation from ‘devouring’ your credit card? This is what the experts say – El Financiero")
Inflation does not stop in Mexico and in the world, as well as fears of a recession. For this reason, personal finance experts recommend being more cautious when making purchases, especially when accomplish credit card payments.
Recently, the United States raised interest rates by 75 basis points for the second month in a row, this while Mexico has followed suit (with an increase of 75 basis points in June), with the aim of curbing inflation and price increases.
As central banks try to curb inflation, Prices are going upand for the second half of July, the National Institute of Statistics and Geography (Inegi) placed the annual inflation rate at 7.99 percent.
In this context, consumers have seen a significant increase in oil prices, bread and other everyday products. With the above, some experts pointed out to Bloomberg that before the increase in all kinds of products, people have concentrated more to buy the essentials.
This is where credit cards appear which, for many, can represent a high cost as a means of financing and even more so with bank interest rates, but for others can be a tool to help usher in this temporary complex for the world economy.
How to take advantage of credit cards in times of high inflation?
The journalist Alberto Tovar explains in his column The financial published on July 23 that in the first place, if purchases are made with credit cards “it is essential to pay the balance on the cut-off date so as not to earn interest. Regularly the same bank indicates it in the statement of account”.
The applications of the banks and an order in the management of the card according to the payments that must be made can be of great advantage, since the financing offered by the card can be increased and serve in case larger expenses are required to attend emergencies.
In times of recession, experts point out that job losses increase, so it is necessary to “tighten your belt”, at least that is the recommendation of Noah Damsky, financial planner at Marina Wealth Advisors.
The businessman warns to avoid unnecessary expenses and save It’s more important these daysalthough this is not the time to panic and make drastic decisions, according to the Goodwin company.
It also indicates that it is of great importance to see credit cards as a “transaction” toolto avoid falling into debts that are complicated by interest rates, this by paying the balance on time.
How to use a credit card?
Alberto Tovar indicates that there are options that can be used from a credit card to make purchases:
- Alternative months without interest: “they take the pressure off the flow. Let’s only take into consideration if we really need the article and if we are not compromising future income too much, “says the specialist.
- Find a card with rewards and benefits when paying on time: “For example, if the fee is 2,000 pesos, and the reward or points is 2 percent of purchases, you would need to purchase with that plastic the equivalent of just over 8,000 pesos per month to be reimbursed the cost. But there are card options without an annuity or with a higher recovery, ”he adds.
BBVA reported in its Mexico Banking Situation report that the consumer credit portfolio in Mexicans increased 2.8 percent, in the first quarter of 2022.
What do you need to know before choosing a credit card?
The National Commission for the Protection and Defense of Financial Services Users (Condusef), recommends that people who wish to have a credit card, compare the benefits they offeras well as analyze the terms and conditions in order not to end up paying more.
In this sense, considering the commissions of each of the banks is importantthis with the intention of making a balance in the use that will be given to the card and the benefits that they can offer.
“Another effect of inflation is that our money is enough for less, so actions must be taken to protect it and can give us a returnwhich is possible if we are orderly and take a few minutes to investigate some options at our fingertips”, explains the Condusef.
Finally, the dependency recommends “Pay more attention to your debt levels and in your ability to pay.
With information from Bloomberg.
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