Credit cards, allies or enemies of Argentine families?

2024-03-28 03:01:00

For many years, credit cards were used to make very large purchases, for which it would take months or even a couple of years to save the money in advance. Not to mention that when you reach the amount, the product has already increased several times and the goal continues to move away. That’s why cards work as a way to finance something really important, like a trip, a large appliance, or materials for a home renovation, for example.

However, in recent months and due to the impact of the very high inflation, The credit card became, for many Argentine families, the only way to make ends meet.. Before it was used to change the washing machine; now, to be able to pay at the supermarket or fill the car with gas on the 25th, because there is no longer any balance left in the bank. And although this situation may be temporary, it is important to take into account some details so that this affects us as little as possible.

The first thing we have to understand is that the cards themselves are neither good nor bad. They are a means of payment and nothing more. The big problem is the misuse we make of them, although later we get angry when we spend half a salary or more on paying the summary.

The reality is that the cards allowed us to make purchases for which we did not put up our money at the time. And if we don’t keep good control of how much we spend, the summary is going to scare us when we receive it.

It is important to distinguish the different situations that led us to get into debt with the card. Reviewing month by month what we bought and why we did it, if it was a necessity or something we might have avoided, will help us use them better, more in line with our budget.

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What do we do with the cards?

The recommendation is to first make a written budget, to know how much money is missing and if that difference is being saved with the cards, which is most likely. If we use a credit card to buy food when we are short of money at the end of the month, then we do not manage to pay the full sum and we are short of money once more at the end of the following month, we enter a circle from which it is very difficult to get out.

It is important to understand that each purchase we make means a debt that we contract until the moment we pay off the entire statement. A purchase in 12 installments is equal to a debt for 12 months. And although it is true that due to inflation the value of each installment “feels” less and that, as everything increases, “it is better to buy it now and card it”, many families fell into despair of seeing how their debt grows and grows. for not being able to pay the total sum each month. The next step is to ask for a loan, from a bank or a financial company, to pay off that debt, which ends up generating one more debt: the loan. Therefore, today more than ever it is necessary to think very carefully before passing a card.

Minimum payment

I regularly receive various questions and complaints regarding credit cards. The minimum payment is usually the most consulted, and I always say that I wouldn’t wish it on my worst enemy. I was there years ago and I know how difficult it is to leave that place. As the months go by, it becomes an uncontrollable snowball. But I also know that sometimes, and more so in the inflationary context in which we live, we have no other option.

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That’s why my suggestion is that, in the third month in which you cannot pay the full statement and you add debt that goes to the next statement, you stop to think and analyze. What has changed in your economy, besides everyday prices? Is there a possibility for you to increase your income? Does the type of job you have allow it? Are there consumptions that you can lower or directly eliminate from the summary? It takes time, I know, but it’s the only way to stay on top of it and keep this situation under control as much as possible.

As a last recommendation, think that the changes are temporary. It’s not regarding banning yourself from everything forever, but regarding adapting your card expenses to what you can really pay, or definitely working on increasing your income to maintain a balance between the money that comes in and the money that goes out. Don’t fall into the “later I’ll see how I pay for it”, because that later comes soon and takes away your sleep and peace of mind. It is time to be as careful as possible with expenses, optimize the use of the money we have and plan the coming months very well.

* Communicator specialized in Family Finances and creator of @dineroenorden

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