Credit cards: how to use them and maintain good credit history? | News
Credit cards are a payment option that allows you to buy in installments, access exclusive benefits and even get out of trouble, if you don’t have cash at the moment, Infocorp-Equifax said.
Whatever the option, the cards can be used to build a good credit history, if payments are made on time and used responsibly, he said.
“Many people tend to have the credit card as their first financial product. For this reason, it is important to be up-to-date with payments because in this way, a positive credit history is being built with the banks ”, commented Infocorp-Equifax Marketing Manager, Sergio Soto.
“If we have a good payment history, financial institutions will see us as a good payer and this will allow us to access other financial benefits, such as loans or credits with better rates, for example,” he said.
In that sense, he shared six tips to make good use of your credit card and improve your credit history:
1.- Avoid having unused cards: It should be taken into account that unused credit cards harm people’s ability to borrow when it comes to qualifying a loan. Therefore, if the card is not used, it is better to cancel it.
Through debt reporting, entities can know if people have unused credit lines and this affects their debt capacity.
2.- Pay the total for the month: It is advisable to make the total payment for the month because the minimum payment of the credit card represents the total debt divided by 36, plus the expenses and interest of the card.
In other words, only a minimum percentage of the capital will be paid and by doing so month by month, the debt with the bank will not only extend over time, but will also accrue interest.
3.- Try not to buy in installments: it is better to make direct purchases or in a single installment. Remember that the more the debt is divided, the more the interest will be.
If you want to buy in installments, there are some entities that offer the benefit of payment without interest in some establishments, so before acquiring a card you must verify the benefits.
4.- Extra payments: Credit cards charge an annual membership, which is a commission for the service of managing the benefits that are provided according to the type of card. For example, the administration of reward programs (points or miles).
Remember that this is an annual payment, which can be waived, in some cases, if the card is used frequently.
5.- Avoid withdrawing cash: it is better to use the credit card for purchases in establishments and avoid withdrawing cash because the interests are usually higher.
Therefore, if cash is needed, it is better to access a personal loan, which will provide a better interest rate.
6.- Pay the card on time: It is relevant to note that paying credit card debt on time avoids charges such as penalties for non-payment and late interest, which can increase as the days go by.
Being up to date on debts also allows you to have a good credit history.
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