The correct handling of a credit card is therefore so important that you do not lose track of your finances. In our day and age, paying with a credit card is part of everyday life. Buying now, paying later, has already led many consumers into the debt trap. Regardless of whether you use it to pay for weekend shopping, holidays or a rental car, the small plastic cards are always on hand and not infrequently lead to the debt trap. Therefore, the correct handling of a credit card is very important so that you can pay all of your bills.
Credit cards have both advantages and disadvantages. With a credit card, you can not only pay conveniently on the Internet, but also use the credit card for spontaneous purchases. Many of these cards have a payment date. This means that the purchase will only be debited from the checking account later. If the checking account does not show any funds, the consumer uses the credit card to obtain non-existent liquidity. Those who do this frequently can get into debt very quickly. If the account is then completely overdrawn, there are first indications of overindebtedness such as direct debits or chargebacks due to insufficient funds in the account.
Our tip: Before return debits occur, look for a conversation with your bank beforehand. Other solutions can often be found so that you do not generate unnecessary costs. Even if unforeseen situations arise, such as losing your job, you should contact the bank. A bank can only help you if you openly seek the conversation!
Payment by installments of the credit card balance can lead to over-indebtedness
The correct handling of a credit card offers the consumer two options to pay the outstanding credit card balance:
- The credit card balance can be paid at once or
- the open invoice can be paid in installments
It should be noted that an installment payment is often charged with very high interest. The amount of the interest is equivalent to that of an overdraft facility and in the worst case can be up to 20%.
Various tips to avoid the credit card debt trap
In any case, cash should come first. If you pay with cash, you have a significantly higher inhibition threshold than with a credit card. Therefore, the correct use of a credit card should be an occasional alternative when shopping. It makes sense if the receipts of the credit card statements are kept and a look is taken every now and then.
So you always know exactly how it looks in the account and experience no bad surprise. To protect against credit card misuse, you should keep your card and PIN separate. If it is found that you are living with your credit card beyond your means, it would be better not to use a credit card. Alternatively, you can use a prepaid credit card. With this, the correct handling of a credit card can be practically learned.
Buy now – pay later with the Revolving credit card
If you buy with a normal credit card, your account will be debited with the outstanding amount at the end of the month. With a revolving function, a fixed rate is debited at the end of the month. The customer can take up to one year to pay the remaining amount. However, high interest rates are required. An interest rate of up to 20% is not uncommon. Consumer advocates therefore advise against this credit card function. While credit cards can make sense, the revolving credit card is not recommended.
The correct handling of a credit card – avoiding the debt trap
The correct handling of a credit card needs to be learned. Those who engage in impulse purchases that are suggested by advertising often buy far too many products that they basically do not need. It is not uncommon for the filter paper for coffee to become a full truckload. As the month ends, the account is practically empty. Whoever uses the credit card in such situations is quickly in debt. Those who pay in cash often put products back because the look in their wallet signals something different than buying. If you have multiple credit cards, you should always use the cheapest. If you do not go on vacation, a simple checking card is enough for the amount to be debited from the account immediately. This is how you learn how to use a credit card correctly.