How to master your credit card so you don’t pay interest

For your finances to benefit from managing a card credit and not the opposite, it is important that you know how it works and its most important concepts. With this financial instrument you can cover unforeseen expenses in your budget monthly like a emergencyas well as financing acquisitions for which you normally do not have enough with what you earn from salary, helping you to build a patrimony.

But not knowing some of the fundamentals of its operation can get you into some problems such as neglecting the amount of your expenses and end up assuming debts for the commitments financial that are accepted when you do not have the solvency to take care of the monthly payments. For example, if you master the concepts of the cut-off date and the payment deadline and take advantage of the times in your favor, you will be able to use your bank plastic without having to pay interest month after month, counting on that period to capitalize and settle that purchase. extraordinary.

If you have an important expense to make, you can do it right after your court date to have the entire month of that period to make the cut again, and then you will have an additional period to cover the payment where the operation in question is already reflected in your Account Statement, taking care not to exceed the payment deadline .

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As indicated by the Bank of Mexico (Banxico) in the country, only a third of credit card users settle their total debt as indicated by the cutoff balance, and these cardholders are the ones who can use their credit card with peace of mind without fearing the repercussions of each cost they charge to plastic.

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The essential concepts that you should know about your credit card and that should have been clearly explained to you when processing the financial product are an important part both so that you do not get into debt and so that you improve your credit history in the Credit Bureau so that you have access to new and better financing; will be the following:

Total Annual Cost. The CAT of a financial product is determined based on its interest rate plus the annuity and commissions charged by the finance company for the use of the credit.

Cutoff date. It is the day of the calendar in which the bank ends a period to analyze how much your debt amounts to in that period, also calculating a minimum payment and the interest to be charged.

Payday limit. It is the day of the month in which you have the maximum to pay the monthly payment of your plastic, which is usually set 20 calendar days after the cut-off date.

Interests. It is the charge that the bank makes to you for lending you the money during the month so that you can make your purchases and that is charged only when you do not pay the balance before the cut-off date.

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Credit limit. It is the limit of the money that your financial institution can lend you per month, calculated based on your income, credit history and payment capacity.

Minimum payment. Amount to be covered before the payment deadline so that your account is not disabled or generate late charges.

Balance cutting. It is the amount of your debt on the cut-off date for your Statement of Account.

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Payment not to generate interest. It is the amount that you charge during a period and that if you pay it off in full in a timely manner you can avoid being charged interest. Includes previous balances, pending interest, commissions and payments of deferred promotions in installments such as months without interest.

If you understand each of these concepts, you will be able to use your bank cards with much greater confidence and you will get the best out of your credits instead of headaches derived from the incorrect use of financial products.

For more information on this and other topics, visit the My Pocket Credits section.

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Graduated from the Faculty of International Studies and Public Policies of the Autonomous University of Sinaloa. Observer of the sky and nature; fan of music and literature.

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