1. Change your lifestyle
You must first look at how you do things, like thinking if you really need something. look at the pros and cons of having that item itself since maybe an impulse buy will put you in too much of a financial stress and you will agonize about it later. like if you really need to buy that Phone that you have been dreaming about, or like buying that applicance in the house that will help you. try to make a list on what it can do and how it will affect you later on. Think about it a lot. take 5 minutes or take even longer as sometimes these purchases are only once in a blue moon.
2. Compute the monthly installments
Compute always the price of the item as sometimes you can actually get a better deal in paying for it in full rather than paying for it in installments. as most people don't check. but the bank does charge a minimum of 3.5 percent per month on installment purchases. but promotions can make it as little as less than 1 percent per month. you always need to look at the better deal as credit card companies is almost robotic when it comes to collection of payments. if you look around enough you may find that you can actually get the item cheaper if you pay it in full or if you pay in cash, however larger store franchise have a set price already so dropping the price may not work all the time. take a look at instances where you need to pay in installments, check if the monthly payments are ok for you and you are ok with the burden of having a debt of a certain duration like 1 year.
3. Get a loan or Card if absolutely necessary
Check what the bank or credit card has to offer. as these usually have lower interest rates than getting cash and paying for it monthly because credit cards use usually 3.5% permonth add on interest on the total monthly purchase and any other purchases afterwards. you can actually get a cash loan or transfer remaning balances from one credit card to another, but again as noted above compute the actual total interest and if you really really only need it. most common interest for these are around 6%-30% per year and divided by a monthly installment amount like for example you need 500$ and offer you a monthly of 50$ a month so the interest for the whole year is almost 100$, check if you can actually earn the additional 100$ within the year. however if you don't pay the full monthly they will add another set of interest on the remaning amount that you left there and it will also add interest to the next months installment. it is compounded so it means everymonth all remaning and future bills are added before interest is given so it gets high very fast. that is why banks have a lot of repossed cars and houses as the interest compounded there is very very large.
4. Pay in full
This is the most important, always pay your credit card in full and before the due dates. for most credit cards 3.5% interest monthly adds up in 1 year. lets take an example. you owe 100$, but only paid 10$ a month so within 10 months you think you have paid for it all. no this is not the case. the total would already be almost around 130$. like the 1st month you only paid 10$ so we have a remaning 90$ in balance, so the next month it would 93.15$ if you need to pay in full. so on and so forth. the only time banks won't charge you for the interest is when the monthy balance is cleared. so as always pay your maximum payment as much as possible to avoid incurring these interest. Loans have even larger interest rates if you do not pay the monthly in full.
2. Compute the monthly installments
Compute always the price of the item as sometimes you can actually get a better deal in paying for it in full rather than paying for it in installments. as most people don't check. but the bank does charge a minimum of 3.5 percent per month on installment purchases. but promotions can make it as little as less than 1 percent per month. you always need to look at the better deal as credit card companies is almost robotic when it comes to collection of payments. if you look around enough you may find that you can actually get the item cheaper if you pay it in full or if you pay in cash, however larger store franchise have a set price already so dropping the price may not work all the time. take a look at instances where you need to pay in installments, check if the monthly payments are ok for you and you are ok with the burden of having a debt of a certain duration like 1 year.
3. Get a loan or Card if absolutely necessary
Check what the bank or credit card has to offer. as these usually have lower interest rates than getting cash and paying for it monthly because credit cards use usually 3.5% permonth add on interest on the total monthly purchase and any other purchases afterwards. you can actually get a cash loan or transfer remaning balances from one credit card to another, but again as noted above compute the actual total interest and if you really really only need it. most common interest for these are around 6%-30% per year and divided by a monthly installment amount like for example you need 500$ and offer you a monthly of 50$ a month so the interest for the whole year is almost 100$, check if you can actually earn the additional 100$ within the year. however if you don't pay the full monthly they will add another set of interest on the remaning amount that you left there and it will also add interest to the next months installment. it is compounded so it means everymonth all remaning and future bills are added before interest is given so it gets high very fast. that is why banks have a lot of repossed cars and houses as the interest compounded there is very very large.
4. Pay in full
This is the most important, always pay your credit card in full and before the due dates. for most credit cards 3.5% interest monthly adds up in 1 year. lets take an example. you owe 100$, but only paid 10$ a month so within 10 months you think you have paid for it all. no this is not the case. the total would already be almost around 130$. like the 1st month you only paid 10$ so we have a remaning 90$ in balance, so the next month it would 93.15$ if you need to pay in full. so on and so forth. the only time banks won't charge you for the interest is when the monthy balance is cleared. so as always pay your maximum payment as much as possible to avoid incurring these interest. Loans have even larger interest rates if you do not pay the monthly in full.
by TodayPh
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