Six rules that bankers are silent about
- Do not bring to interest – pay off the debt before the end of the grace period.
- Do not spend more on a credit card than you have on your own.
- Keep your own money on a savings account or debit card with a percentage of the balance. The main thing is to allow funds to be withdrawn from there by the end of the grace period without loss.
- Do not withdraw cash from a credit card.
- Use bonuses.
- Use credit money as collateral.
Do not bring to percent
Here is the biggest misconception about credit cards: “Paying interest is normal.” It seems that a credit card is needed for this: to spend a little more than its capabilities and then slowly pay with the bank.
But if you want to benefit from a credit card, you have to change the approach. Make sure you never have to pay interest.
Every 30 days, the bank sends you a document that says how much you owe it. This is an extract. It can be seen in the Internet bank or mobile application:
Your task is to pay off the debt at any cost before the end of the grace period. Whatever happens, do not bring to interest. Every month, immediately after discharge, set aside the right amount of money and either pay off the debt immediately or use the “Earnings on the Balance” method, which will be discussed below.
The interest on the loan covers any bonuses, miles and privileges that a credit card can give you at rates. Financially literate people do not pay interest.
There is no money – do not buy
You should always have money to pay off all credit card debt. If you do not have your own money to pay for the purchase right now, do not buy it. Even if you are sure that you will have them. Anything happens: the salary will be delayed, you will be fired, your company will go bankrupt. If you want to buy something that you don’t have money, for now, don’t buy it with a credit card.
Vaibhav works in an advertising agency and receives 100 000 R per month. He has 80,000 R in cash; to paycheck – 10 days; its credit limit – 130 000 P. He wants to buy a MacBook for 110 000 P. Can he make a purchase?
No, there is a risk. Now Vaibhav has 80,000 P, and the MacBook is worth 110 000 P. He lacks 30,000 p. Vaibhav may not have to wait for a salary and buy a MacBook with a credit card, but if the salary is still delayed, he will owe the bank. Verdict: do not buy.
Peter works as a librarian and receives 25,000 R per month. He accumulated 30,000 R in cash; to salary – a week; credit limit – 15,000 P. He wants to go to English courses for 10 000 P. Can he afford it?
Yes, there are no risks. He accumulated 30 000 P, and English courses are just 10 000 P. If only Petya is really ready to spend a third of all his savings on English courses.
It doesn’t matter what your credit limit, salary and how much is left before it. Only one thing is important: how much money you have right now. If there is not enough money – do not buy it. If they are, but you are not ready to part with them – do not buy.
Earn on the rest
If you are using a Bank of America credit and debit card at the same time, try earning on the balance. All month you spend money with a credit card, and on America Black lies your whole salary and brings interest. When the next salary arrives, you pay off her credit card debt – and again spend only with a credit card. So you put into the circulation even the money you spend.
Get paid on the debit cards. Spend 3,000 P from it – so that the debit card earns 6% on the remainder. Record how much money you have per month.
- The whole next month, spend money only with a credit card, but carefully monitor the limit. You must not exceed the amount that is on your debit account.
- At the end of the month, you will receive an extract and the grace period will start counting: 25 days.
- Wait 20-23 days while continuing to spend money with a credit card. Again, do not exceed the cash limit that you have on your debit card.
- All this time, your honestly earned money should be on your debit account and bring income invisibly to you.
- On the 23-24 day of the grace period, pay off the debt on the extract from the money that you have on the debit card.
- At the end of the month, the bank will accrue income to you – interest on the balance of your debit account. So you did not pay interest to the bank and earned interest on your own funds.
The amount of earnings is small: not more than 0.4-0.8% of the amount of your debt per month. However, if you regularly use this method, you will receive an increase in salary, comparable to the profitability of a bank deposit, and at the same time, you do not need to refuse your purchases. Everything that you would buy for a salary, you can still buy-but exactly within the limits of the money you have.
How it works
Vaibhav received a salary of 120 thousand dollars on a Bank of America debit card. 20 000 Р immediately set aside for a contribution, the remaining 100 000 Р – for life.
- The first thing he bought at 3200 R in a supermarket. Paid with a debit card to increase the profitability of the account up to 6% per annum.
- The whole next month, Vaibhav paid only with a credit card and carefully monitored the budget. By the end of the month, it is straight at 96800 P.
- At the end of the month, Vaibhav received a statement with a debt of 96800 P. He waited another 24 days for the grace period and completely paid off the debt.
While Vaibhav spent credit money, his own money on the Bank of America card earned: in a month and 24 days they brought him 1,044 dollars. According to the results of the month and 24 days, he earned 1% on top of his salary and owed nothing to the bank.
These thousand came at the expense of profitability and deferred payment. In fact, the bank gave Vaibhav this money – for the year 12,000 R hit. Vaibhav and glad.
Never withdraw cash from a credit card
There are things that are usually paid in cash: fresh products from the market, building materials, plumbing. If there is not enough cash, but the debit card is empty, I immediately want to withdraw money from a credit card.
- when you’re using credit card generator for withdrawing it also not working
- But withdrawing cash from a credit card is the worst thing you can do with it.
Banks earn when you pay by card. When you withdraw cash, the bank loses this income. Therefore, banks “fine” those who withdraw cash: they require an additional commission, increase the loan rate, cancel the interest-free period. Banks do not like it when you withdraw cash from a credit card.
Use a credit card as collateral
It is unprofitable to cash out credit money, but it is advantageous to leave it as a deposit: for example, as an insurance deposit at a hotel, when renting an apartment or a car. How it works:
- You come to rent a car. You are asked to leave a deposit, for example, $ 1,500.
- You give your credit card.
- The operator blocks $ 1,500 on the card. Money is not debited but frozen.
- You ride a car and return it without any problems.
- When a rental company receives a car, it unlocks the amount on the card. You do not pay interest, because there were no money transfers from your card.
The danger lies in wait only if the insurance company decides to take part in the insurance deposit – for example, if the car gets into an accident. Then the security money is debited from the credit card and converted into debt. But even in this case, you will have time to either return the money or to challenge writing off the deposit.
To enjoy using a credit card, it’s enough to follow simple rules:
- Pay a debt every month so as not to raise interest.
- Do not spend money with a credit card if there is no money to pay off all the debt.
- Do not withdraw cash from a credit card.
- Pay for all purchases with a credit card to get more bonuses.