The credit cards They are key financial tools that provide quick access to short-term money and build solid credit histories for businesses. personal finance.
Although its use can mean an intelligent decision for personal finances or an imbalance in the financial stabilitythe financial mechanics behind this financial instrument It will allow the user to build a good credit reputation and be able to manage capital with intention.
One of the main mistakes is to think that credit cards are an extension of the salary, and not a loan of the banking entity, making expenses that exceed the income and, when the payment date arrives, realizing that they will not be able to pay off the entire amount spent on the credit.
Given this practice, it is common to pay the minimum to avoid the blackberry and keep the account up to date, but if this becomes a recurring habit, the debt can extend for more years, in addition to the fact that the money paid is largely directed towards covering the interest generated and a very minimal amount is directed towards the original capital.
For example, if you acquire a debt of RD$50,000 with minimum payments of RD$2,991.99, under a interest rate of 60%, the final payable would be RD$60,703.62 in interest over a period of 37 months.
In order to pay off the card balance in a shorter time, the ideal would be to make monthly payments in full or greater than the minimum amountthus avoiding generating interest and having greater control of the financial product.
Of course, doing this practice from time to time will do minor damage to the credit history It is advisable to develop a realistic plan according to income and expenses to pay off the debt in the shortest amount of time.
