Use your credit card wisely
You often write to us that you have a problem paying off your credit card, because the bank has granted you a huge limit that is not proportional to your financial capabilities.
This topic comes back to our blog from time to time in various scenes. Today, we decided to write how to use a credit card wisely to avoid debt default.
A “tempting” banking product
Jan, being a modern customer of bank X, with no debts, who often and eagerly uses electronic banking without leaving home, finally decided – out of curiosity – to go to his bank’s outlet to withdraw money. The bank always offers different products to every customer – you know – it wants to earn in this way.
Therefore, he offers a greeting card with a limit of 4,000. PLN, despite the fact that the income of the client in question is not among the highest, and they certainly deviate from Western standards.
At this point, Jan states that in this way he could contribute to the household budget, and perhaps even enough for the renovation of the apartment planned for months. Seeing the opportunity and the opportunity to get extra money, he agrees to the bank’s terms. Just what next?
In the credit loop
We live at the bank’s expense with this payment method. You can get used to it very quickly. Interest does not bother you at first – they are low.
While monitoring the debt, the bank suggests raising the limit from time to time, and here lies the whole problem! Until now, card repayment was somewhat enforceable and within budget.
After a few increases in the limit, this may not be feasible, so there are also those who pay back their credit card with another one – in this way they make more debts just to be able to pay off the previous ones. Vicious circle, right?
First and foremost
Before you get into serious debts, it is worth considering paying by cash – then you feel the value of money and automatically reduce expenses. You will simply spend more paying by card. However, if you are a person who very willingly uses a credit card at every possible opportunity, then you should consider giving it up for a debit card.
Use your credit card, e.g. only to pay all bills. Thanks to this you will spend much less, and having surpluses on the card, you can transfer them to a savings account, to be able to earn extra money (delaying the payment of the card a bit).
However, if you are already in debt and you cannot cope with repayment, it is worth considering mediation on the commitment. It consists mainly in negotiations with creditors regarding new and more favorable conditions for repayment of financial liabilities.