The high level of indebtedness of Portuguese families is highly motivated by credit cards. We have in Portugal more than 1 credit card per adult … that is, more than 10 million credit cards. If we assume that these cards have rates close to 20%, it is easy to see how financial problems increase. That being the case, we will give you 3 tips to deal with credit cards.
Check your Debt and Debt Conditions
Nothing is better than knowing the true size of your credit card debt and what impact it has on your budget. To find out how much debt you have on your credit cards you can always check your latest credit card statement. However, it is more practical and reliable to consult the map of responsibilities of the FFC Bank.
Since you are going to get in touch also look for to know its modality of payment and what modalities available for payment and still what the rate of interest of the card. Make a small table in Excel or a piece of paper where you will create 6 columns with, name of the bank, name of the card, amount in debt, mode of payment, existing payment methods, interest rate of the card. If you have more than one credit card, please be sure to include it in the above table.
Define a Payment Strategy
Not having credit card debt from one month to the next is a gain early on. If you consider that the average interest rate is around 18% then you know that not having debt is earning 18% per year of profitability (tax free). It soon makes sense to define a payment strategy that you can determine as you wish and according to your financial capabilities, however, I leave you two currents in this area for inspiration.
- 1st Current:
Pay first the credit card debt with higher interest rate. This strategy may not be the one that will motivate you most but it is certainly the one that saves you more money
- 2nd Current:
Pay the card with the lowest debt first. Here you will have faster results because as you start paying the credit card with the lowest debt then you will quickly get rid of that card and dedicate all your efforts to the next cards.
Pay Attention to Your Credit Card This Year
It is obvious that we are careful with our cards and that we are aware of the various mock schemes that exist, but, it is not about this type of prevention that I intend to speak but rather, in a legal scheme of withdrawing a few euros each month from your portfolio: the interest.
The recommendations are simple:
- Use the credit card only for urgent, necessary and essential purchases;
- Choose the mode of payment at 100%;
- Comply with the 3 Fundamental Rules in the use of credit card
Want to Get Rid of Credit Cards?
If you want to do away with all your credit cards you should consider the possibility of doing a credit consolidation. If you have a property you can also test the consolidated mortgage loan. The savings are very significant and can be half way through so that you can end all your debts and constitute a savings account.