Credit cards are one of the best means of financial leverage, knowing how to use them correctly .
And knowing how to use them includes things that we should never do because we are going to get into unnecessary and totally avoidable problems, even if we have financial needs to meet.
# 1 Advances Or Cash Withdrawals
First of all, because they have a cost; and second, because they charge interest from day one .
If you need cash availability, you should get it from your savings account (through your debit card) and find a way to get it for free.
In some countries there is the option of making this type of withdrawals with a credit card at no cost and without interest, through third-party applications; But let’s say it is knowing and understanding what are the associated risks or costs associated with this type of behavior.
Many times there is simply the need and we have to do it (if it is a need and it is really essential that we make that decision, we must do it), but it is best to avoid it at all costs or look for better alternatives.
# 2 Buy with a card where they charge more for using this means of payment
It is logical that, although we can obtain benefits by paying with credit cards (points, cash-back, miles, etc.), all this is canceled with having to pay more in the store (when especially some charge up to 10% of more, it is really unacceptable).
So, in those cases we should simply pay in cash or look for a site that does receive a credit card for the same value of the product or service.
# 3 Buying From Dubious Websites
Sites from which we do not know its origin and with which we risk that the transaction is actually made for a greater amount or that they share your card number with third parties (and perhaps they will not do anything during the next few days and you think it was a reliable site, and after three months it is an unauthorized charge with which you will have to fight later with your bank or whatever).
It is really essential, in this type of case, to make use of a little more secure tools, such as pre-paid cards that can be created from the bank, recharged with a certain amount, make the purchase and delete it completely or renew so that change the numbers and then we can make charges to this type of card number.
So, in these cases it is a matter of avoiding risking my main card number, because my information can be stolen.
# 4 Give The Card Number, Or The Expiration Date, Or The Security Code To Someone
Nobody needs all that data, it is sensitive and private information.
In fact, there are people who decide to cover the back number with a kinetic, the security one, because they can actually be recorded with high definition cameras and then obtain all the information through a video and they can make unauthorized charges.
Most of the fraud that occurs at the credit card level is due to the carelessness of the people who use those cards.
It is also important to be careful of false bank advisers, who call you saying that they are from a certain bank and that they only need to validate certain information.
The truth is that getting the full number of your card can be relatively easy, so some people will want to confirm the other two data through calls, saying things like ” just for security and to validate ownership, I need you to confirm such a thing to me «. You can’t do it .
You should understand and perhaps ask your bank what kind of data they ask for in calls, so you know that they are not cheating you.
Actually, if they call you and say ” good afternoon, I’m such a person and I’m calling you from such a bank ,” how do you know whether to believe them or not? It’s complicated.
Some banks have measures regarding this, but there is no shortage of people who want to bypass one and, in these cases, I prefer to hang up the call and myself, proactively, go and request whatever I need with my bank.
# 5 Any Purchase That Involves Paying Interest From Day One
Banco Davivienda, for example, charges interest from the first moment with the purchase of gasoline with credit cards; while there is another bank, like Colpatria (I think), which offers you especially a credit card with a discount on gasoline, which does not charge you interest (so, obviously, there it would not make sense to use that of one bank, but that of another ).
For example, some banks (as in Colombia), Bancolombia charges you interest from the first day for paying taxes with your credit card.
All that is interest costs nullifies any benefit there is, and if it is with an advance (or cash withdrawal), what we already mentioned applies: additional costs and other unnecessary expenses, which do not make sense to incur them.
# 6 Pay Another Credit Card
Usually people do it with cash advances and instead of reducing the debt what they do is defer it, increasing its cost; Except when we talk about a portfolio purchase (that another bank acquires this debt, offers you 30 days to pay and reduces the interest), perhaps in this case instead of being a bad decision it is a good decision because you are extending your term and reducing your cost; But most people who pay one card with the other are running into even more debt.
# 7 Buy In Other Currencies (International Currencies) With The Wrong Credit Card
You have to understand that some offer purchases in dollars (for example, if the country where you are handling pesos or any other currency other than dollars), and allow buying in dollars at a fair conversion rate or at the representative market rate of the day (the TRM).
Others charge a surcharge of 1%, 2%, I have even seen 4.5%.
So if I have the option of using one of two cards, I use the one that is most convenient for me; or if I do not have one from a bank that is really good at that and I plan to make these types of expenses (I will be abroad, or I will make an online purchase in a foreign store), I should really look for the option that best suits me and try to get a credit card that benefits me in those kinds of costs, to save money on expenses that would otherwise be unnecessary and unjustifiable.
And know that, anyway, there are times when it is cheaper to buy with a suitable credit card (making a good conversion, in your bank, to your local currency), than even paying in cash or buying foreign currency (buying cash ) at the airport of the country where you are arriving, to spend cash in places where they still receive credit cards, because the conversion rate that they handle may be higher than the conversion rate that your bank handles.