Tips to avoid high debts on your credit cards | Credit cards

 

The tranquility, tranquility and relaxation that free days provide can lead us to spend more than the bill. Moreover, if we do not go with enough care, those days off can become a real nightmare. In fact in recent months, many media outlets have echoed the increase in complaints from consumers due to the high interest rates of some credit cards.

And they are a very useful financial product to go to obtain short-term liquidity but its use is not recommended for medium and / or long term Avoid it! In cards-of-credito.net we remind you that in some cases, interest usually exceeds 20% APR. However, as previously mentioned, they offer other advantages: rent a car, hire trips, dispose of cash with total simplicity, save up to 4% when filling the deposit and much more.

Take note of these tips and use worry-free credit cards

Take note of these tips and use worry-free credit cards

The convenience of being able to pay for our purchases in installments is one of the reasons why many regularly enjoy this type of plastics. The problem comes when we verify that the debt is eternalized since every month a very small fee is paid that can be faced but the interests are accumulating. Would you like to avoid it? Below we list a series of tips, put them into practice!

  • Payment Method

    Payment Method

    First of all, even before using the credit card, it is vital to check which payment method you have active. This management can be completed on the website of the issuing company. However, if any doubt arises or it is not possible to make any changes, the procedure must be carried out by phone or at the bank itself. Please note that as a general rule most cards are delivered, by default, with the deferred refund option.

    In any case, if you wish to pay in installments, the ideal is to establish a high monthly payment to cause the minimum interest.

  • End of the month

    Remember that another of the preferences granted by credit cards is to pay at the end of the month in a single payment. Logically, there will not be a penny in interest. Therefore it becomes the perfect modality for all those users who do not wish to finance.

  • Easy Pay

    Easy Pay

    The financial sector is constantly evolving. So much so that today it is viable in some cards, to postpone payments in several monthly installments with a series of very profitable conditions. The APR is reduced to 5% and, on the other hand, this financing can always be requested through online banking. Without a doubt, it is a very interesting way to postpone orders and / or purchases at specific times.

  • Advances

    Advances

    As you well know, if there is the opportunity to advance part or all that is due, it is the best. For this reason, if you receive an extra income is 100%, allocate it to that end and stop generating interest.

  • If necessary, hire other financing

    Hiring a loan to solve an unforeseen, urgent or timely situation of lack of liquidity are usually the most common situations that can lead us to ask for extra money. Now, do you know which possibility is the most recommended for you? There are many options in the financial market. Personal loans, for example, are usually characterized by an average cost of 8.50% APR. That is, a much cheaper alternative.

  • Use responsibly

    Use responsibly

    Setting a budget is one of the most recommended steps by financial experts. This is good advice because as long as we are realistic, adjusting to it, we would not have to have problems when it comes to paying cash. Even so, throughout the year there are certain dates in which it is worth investing and you cannot constantly afford to pay the bills at once. Yes, we mean sales. On these occasions, taking advantage of discounts is more than appealing.

    Well, under these circumstances, credit cards can grant us many benefits but it will only be so under responsible use. It is extremely important to control the impulses. That is why it is essential to do our part. Consuming responsibly will be essential to make it happen.

Lending – what is it and how it differs from a loan

Lending is a form of transferring a given item to another person for a specified period of time. This transaction is free, so neither party bears the cost of borrowing. It is worth making a loan agreement so that there is no misunderstanding when it is terminated. Remember that we can use not only the premises, but also a car. Then it is worth writing a car rental agreement in which the operating conditions will be determined.

What is a loan?

What is a loan?

Lending is giving someone something that usually belongs to us for a certain period of time. Handover is for free, which is the opposite of e.g. rent.

The terms of the loan are in art. 710 of the Civil Code, which says: “By the lending agreement, the lender undertakes to allow the recipient, for a definite or indefinite period, to use the goods given to him for free.”

Lending is often mistaken for a loan, which applies to e.g. a loan secured by non-bank institutions. Let’s pay attention to the provisions, especially when signing contracts.

Lending agreement – parties to the agreement, subject and duration

Lending agreement - parties to the agreement, subject and duration

When lending someone an item, it is worth making a contract that includes the terms of the transaction. Although the lending is free, it is worth indicating in the document, e.g. in what state the item was transferred to another person. Remember that we do not have to be the owners of the item that we lend.

The loan agreement may be concluded orally. However, it is worth making it in writing, as is the case with a loan agreement from non-banking companies. The loan agreement should include information on:

  • parties to the contract, i.e. persons transferring the item in question;
  • the lending period, i.e. the time for which the item was transferred to another person;
  • the subject of lending, that is, the thing transferred to the other person and his condition.

Lending and tax

Lending and tax

It is good to know if you have to pay tax on someone or if you have a loan, which is an obligation when you apply for one of the many types of loans – a family loan.

The loan agreement is not subject to tax on civil law transactions. The person taking possession of the item usually bears the cost of maintaining the borrowed item (e.g. buying fuel for a car). These costs are not reimbursed by the lender. If a larger and expensive breakdown has occurred, the cost of repairing it should be consulted with the lender.

However, we should remember that if we lend something to a person who is not a member of our family, we must pay personal income tax and the contract must be shown in the annual tax settlement.

Termination of the loan agreement – conditions?

Termination of the loan agreement - conditions?

The loan agreement expires on the day that was set out in the contract when the recipient uses the item in the manner specified in the contract or the time in which the item could be used ends. At the end of this period, the item must be returned. If it is appropriated, the case goes to court.

There are situations when a lent item can be returned earlier than the contract assumes.
This occurs through the termination of the contract, which is somewhat reminiscent of the termination of the loan agreement. However, this is definitely faster and can occur when:

  • the item is used contrary to its purpose and in a manner contrary to previous arrangements;
  • the recipient gave the subject of the contract to a third party, without prior agreement with the owner;
  • the lender will ask for the return of the item, because it becomes necessary for reasons not provided for in the contract.

Car rental agreement – when?

Car rental agreement - when?

Young drivers who do not yet need to buy a car or do not know which car to choose, can borrow it. A car rental agreement will be useful for this. Terms of lending should be established, i.e. information about which car will be lent and for how long.

Remember to describe the current condition of the vehicle in detail so that there is no later misunderstanding at the end of the contract and return of the loan. Let’s be aware that we don’t have to be the legal owners of the things we want to lend to the other person.

What is the difference between credibility and creditworthiness?

Credibility and creditworthiness are concepts that sound similar to each other, but they mean something completely different. If we are borrowers or only we will be, it is important that we distinguish them from each other and know what their differences are. They are extremely important when analyzing a loan application by the bank, because thanks to them, the above-mentioned can grant us a loan as well as refuse to grant it. Important information on creditworthiness and creditworthiness is provided below.

Creditworthiness is the borrower’s ability to repay the loan.

Creditworthiness is the borrower

To calculate it, the bank takes into account many criteria, such as our monthly income, expenses that we incur on a daily basis and financial obligations that we have towards other financial institutions. Each of the above criteria is more or less important for the bank. In short, the higher our income and lower expenses, the more likely we will be granted a loan. It is also worth remembering that financial institutions attach considerable importance to the type of contract under which we provide work. If it is a permanent employment contract, then in the eyes of the bank our ability increases. However, if we talk about popular garbage trucks such as a mandate contract or a specific work contract, they unfortunately do not guarantee us to receive a loan, even if we achieve impressive earnings on their basis.

What is creditworthiness?

What is creditworthiness?

Creditworthiness allows a financial institution to assess the risk of not paying back a commitment. In order for the above-mentioned to be estimated, the applicant’s previous credit history is verified and on this basis it is determined whether he will diligently fulfill his commitment or whether everything indicates that this will not happen. In this situation, it is determined how stable the borrower’s financial resources are and whether they will guarantee repayment of the liability in accordance with the repayment schedule. In addition, creditworthiness can also be called the borrower’s willingness to repay the liability, because not always having enough money guarantees that the person will repay their liability under the contract.

Are both concepts equally important for a financial institution?

Are both concepts equally important for a financial institution?

The answer to this question is affirmative, because at one point both creditworthiness and credibility combine with each other. A borrower who does not regularly repay his liability because he has lost the ability to regulate it also loses credibility. It is worth remembering that both of these parameters are treated identically by the bank and the uncertain situation in even one of them may lead to the fact that we will receive a negative credit decision. In connection with the above, we should remember to conscientiously and reliably fulfill their obligations, because their repayment history is publicly available in banking systems and it is easy to verify.