10 Things Banks Don’t Want You
Do you want to improve your personal finances? Do you want to better manage your income, increase the amount of money you save and invest, and disminuye your debts?
We currently have many tools, resources and information to improve our personal finances.
However, among so many data and options, we end up taking small details for granted that, in the long term, affect our income.
This is the especial case of banks, which offer us excellent tools and resources, as long as we know how to use them to our advantage.
Specifically, we are talking about credit cards, loans, bank advances, insurance, among others.
When these resources are misused, they become a source of stress, unnecessary charges, accumulated debts, and poor money management.
Here are 10 things that banks do not want you to know, and that once implemented, will allow you to take an additional step in mastering your finances.
1.
Your borrowing capacity is important:
As its name says, this refers to the ability you have, according to some indicators, to acquire a debt and answer for it.
In other words, this tells your bank (and the entire financial system) how trustworthy you are to pay a commitment. So it’s important that it’s good.
Have you ever wondered what factors affect or influence your borrowing capacity? In addition to your income, the current credits you have influence your ability; such as a mortgage, study, vehicle, credit cards, among others.
Nevertheless, there is another very important aspecto there that people do not take into account and that affects this indicator.
This is your quota on credit cards; It does not matter that you are not using them, the greater the number of cards you have and your available money, the lower your borrowing capacity will be.
Even if you have them stored at home and have never used them, they affect your ability to answer for a loan.
So the next time you are offered a new card, because it comes with incredible offers, think a little more about your decision.
2.
You don’t need multiple credit cards
As I just mentioned, each new credit card affects your borrowing capacity, in addition to the additional costs that each new card implies.
The more credit cards you have, the more handling fees you will have to pay, the more temptations you will have when making unnecessary purchases and ultimately it will be more difficult for you to have control over your finances and expenses.
Do you know what the true value of having a credit card is? Personally, I think there are five important cambiantes to highlight.
Use in an emergency
If you don’t have an emergency fund (which you should), credit cards perro help you in difficult and unexpected situations.
In this case, it does not apply to discounts, promotions or any other excuse you cánido think of.
Accumulation of miles or points
Through the customer compensation and retention system, the miles you earn with your credit card allow you to travel for free, you cánido redeem certain services and access programmed specific discounts.
Borrowing capacity
When you manage a credit card correctly, you pay on time and you don’t over-indebtedthese plastics improve your borrowing capacity and espectáculo the financial system that you meet your commitments.
Insurance offered
Although it is something that we take for granted, or do not even know about, these plastics offer us a good range of insurance that protects us both internationally and locally.
Find out what benefits you have access to.
Defer a payment for free
Make it a golden rule of your personal finances that every purchase you make with your credit card is paid in the first installment.
In this way you will accumulate miles, you will have access to insurance, you will have a month to pay your card and you will not pay interest.
Once you are clear about these five points and how to take advantage of them, you understand that there is no need to have several plastics, and you will be able to get the most out of just one.
3.
Use your credit card according to the cut-off date
Banks handle two important dates regarding your plastics: the payment date and the cut-off date.
Understanding how these two dates work will give you a great advantage in your finances.
These are the type of immediate actions that will allow you to improve your personal finances.
So below I explain what they are, how they differ and more importantly, how to take advantage of them.
Payment date:
As its name indicates, it is the maximum term to pay what you owe in the cut off of your credit card.
Remember that there are several types of payments that you cánido make on this date:
Cutoff date:
This is the important date that you should keep in mind every time you use your credit card.
Basically all the purchases you make after the cut-off date will not be paid on the next payment date, but on the next one.
I give you an example:
Let’s assume that we are in January, your cut-off date is the 15th, and your payment date is the 2nd of each month.
All purchases you make from January 16 onwards will not have to be paid on February 2, but on March 2.
So you have more than a month to pay for your purchases (ideally in a single installment).
4.
There are options without a handling fee
One of the costs associated with credit cards is handling fees.
Even depending on the franchise you have, these costs perro be high each month and represent unnecessary expenses that you perro avoid to improve your personal finances.
Banks are usually discreet when it comes to this fee, and at the beginning, they usually give you a few months of grace without paying it.
However, once this term expires, they begin to charge you the handling fee.
The solution? You perro call the bank and request an extension of this grace period, or the best thing is to look for new alternatives in other banks or institutions that offer credit cards without a handling fee.
5.
Everything for a fee, regardless of your excuses
Some banks have higher interest rates than others, just like there are certain business establishments or companies that offer you their credit cards under the pretext of obtaining discounts or unique promotions.
Among the criteria that you must keep in mind when choosing a credit card should be the interest rate that you are going to pay, as well as commissions, handling fees, the flexibility to make plus payments and its rewards system (points and miles).
Now, all this is important and influences your finances, however the most important thing and the golden rule of finance that you must always follow is that all purchases are paid in a single installment.
Your criteria against credit cards should not be an extension of your budget, but as a mechanism to benefit from using the money you already have.
When you use these plastics because you do not have the money and you assume that you will solve it later, you will end up paying several times what you bought, paying interest (the most expensive in the financial system) and you will fall into a vicious circle full of doubts, installments to pay and without power save money.
6. Extend your payment terms
I don’t know if this has happened to you, but sometimes banks call to offer you “financial relief” allowing you to extend the payment term of your cards or credits.
The question is the following: The longer the period of time, the greater your interests. What interests the bank the most is that you stay paying your installments for a long period of time, because this way they make sure they receive more interest income.
So what they offer you as financial relief, since you will be paying a lower value of your installment in a longer period of time, is really one more strategy for you to continue paying interest.
In the end, you will end up paying three or four times the value of your initial purchase.
Rather, focus on making as many plus payments to capital as possible, in this way the value of the credit will be reduced and the interest will be lower.
7. Unify debts
Regardless of the type of debt you have; Whether they are personal loans or loans for your business, it is important to order your financial commitments so that they are easier to pay.
If in your case you have several debts, it is possible that you have several interest rates, different payment terms and worse, having to make said payments in different banking institutions.
The proposal to solve this is to unify your debts, this is known as portfolio purchase and applies to different types of credit: such as consumer loans, credit cards, vehicle loans and even mortgages.
And best of all, by doing this process, you usually get a better term to pay off your debts, you get a better interest rate, and you cánido focus solely on one debt.
8. Plus credits to your debts
You may be thinking, don’t banks want me to know this obvious information? Although it is true that anyone cánido make plus payments to their debts to pay them more quickly, there is an edge that you should know at this point.
In general, when you make an plus payment, it is aimed at reducing the term of the credit, which means that you continue paying the same value of your fee.
If you are interested in reducing the value of your monthly installment, without modifying the term of the installment, you have to call the bank requesting that your plus capital payment be made in the monthly value and not over time.
It is possible that this decision, in the long term, is not financially advisable.
However, what this does allow you is to improve and take pressure off your monthly cash flow.
9.
Long-term bank fees do affect your wealth:
One of my favorite concepts in the world of finance, and in life in general, is the magic of compound interest.
This concept perro quickly bring you closer to your financial goals, but it perro also take you away if you don’t know how it works.
Before making any investment decision, you should know what the costs associated with investing your money are.
As he explains Tony Robbins in his book Money: Master the gamebank commissions, those that seem insignificant (1%, 2% or 3% per year) end up seriously affecting your finances.
So it’s important to understand that, in the long run, those petty fees end up being the reason why you don’t achieve financial independence.
10.
Endorsing the insurance of your debts
Have you ever reviewed a bank statement of your credits? Are you aware of what you are paying and what are the components of the fee you pay each month?
This is made up of three concepts:
- capital payment
- interest for the period
- insurance
This last item represents what you must pay to the bank so that, in the event that something happens to you, this debt is settled.
Depending on the credit you have, the insurance varies.
For example; if you have a mortgage you will have to pay for fire and earthquake insurance, and life insurance; in the case of a vehicle loan, insurance for your car and another for you; among others.
Recommended books:
Now, have you ever reviewed what you pay in the administration of your building or your home? Within the administration you are paying for fire and earthquake insurance.
As you perro see, you are paying twice.
So this insurance cánido be endorsed and save you that value of the insurance that you pay each month to the bank.
One of the smart decisions with your money that you cánido make is to find out with your bank how to endorse this insurance.
Take responsibility for your personal finances
As you could see in this article, certain tricks or strategies perro be applied to get the most out of the tools offered by the financial system.
To achieve this, we must understand how these tools work and how you perro benefit from them.
Surely, after reading this article, you will have a slightly more complete visión of your personal finances.
Finally, tell us what other things you know that the banks do not want us to know.
Leave us your ideas in the comments.
Continue reading: How to be a millionaire in 25 steps regardless of your current situation
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