The credit card can be an excellent tool for accumulating points, cashback and benefits program. However, when not used correctly, it can become a budget villain and cause unexpected debts. Therefore, it is important to know when not to use credit card to prevent paying high interest and not embolish the bills.
cash withdrawals
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Credit card withdrawal modality is provided by many banks. However, the cash advance is usually accompanied by high interest. Therefore, it can easily snowball and compromise your budget.
Payment of unforeseen expenses
It is common for many families not to have an emergency reserve to cover unexpected expenses and resort to credit cards. However, although it is an idea that brings comfort, using the card to pay unexpected expenses can generate a debt that becomes difficult to pay.
subscription services
The expansion of subscription services may be accompanied by problems, in particular, due to the fact that the charge takes place on the credit card. Therefore, check your invoice regularly to avoid unwanted or duplicate charges.
recurring expenses
Recurring expenses such as electricity, rent and gas bills, or even monthly expenses can be paid with a credit card. However, the person must make sure that he will be able to pay off the amount on the due date, to prevent expenses from getting out of control.
Cash purchases
The credit card works as a cash advance. Therefore, purchases in installments become attractive: The person does not have the entire amount to pay at that time, but can do it from the credit card.
However, it is important to plan to pay for purchases in installments and organize the budget to pay these amounts. That's because, without the necessary organization, paying installments can erode your budget and make you contract debts that you won't be able to pay.
impulse purchases
The credit card can be considered a villain in the budget when it is used to make impulse purchases, especially when there are sales or great offers.
Therefore, even if you apparently have some money – which is the limit of the card – buying on impulse can lead you into debt. So try to make a monthly budget and buy only what you can afford. Preferably in sight.