It is much better to learn them without accumulating credit card debt.

For a part of young Portuguese, the first big shock appears in the form of a credit card account. In fact, many people have no idea how fast they accumulate card charges, only realizing what happened when they receive an invoice of 10,000 euros to pay.

But as the popular saying goes, “at first everyone falls, the second only falls who wants and the third only falls who is silly,” meaning the following lessons are worth knowing:


1. You will not realize how you got to this point


1. You will not realize how you got to this point


Denial is the first phase. It will not understand how the debt reached 10,000 euros. In fact, what you remember buying was just a few meals, a pair of shoes and a few concert tickets. Did you “hang up” during the other purchases?

It seems so.

Some studies have already shown that credit cards increase the willingness to spend. The part of the brain that warns you about excessive spending seems to shut off every time you hold onto a card, encouraging impulsive shopping.

In another highly regarded study by Prelec and Simester, it was revealed that just seeing a logo on a credit card to get in the mood to buy something.

In addition, when you do not take money out of the wallet, you do not feel the difficulty in spending. As a consequence, it will buy more impulsively and in larger quantities. Consequently, you will not realize how the credit card confused you until the first time you receive a spectacular bill.

So at we recommend people review their credit card account at least once every three days, which is the best way to know how much they are spending and when they have to stop and leave the card at home. Do not just review at the end of the month – there you must already have a monstrous debt.
Discover: Using credit cards for the first time? 5 Things You Should Know


2. Paying off card debt is like trying to make the Titanic not sink


2. Paying off card debt is like trying to make the Titanic not sink


After three months of desperate repayments, you’ll take a look at your debt to find that it has been reduced to … practically nothing. When the debt of the card is too large, the interest rate (which in Portugal is around 18%) alone constitutes a large part of the payment. For example:

  • Imagine having a debt of one thousand euros on the card, at an annual interest rate of 18%, payable in 12 months. However, if you pay 15 euros per month, without using the card for other purchases, the first monthly payment carries 16% interest.

Know, however, that although 15 euros per month for a year is a fairly smooth payment, the interest rate can be lowered if you decide to pay a higher percentage in less time. And, in addition, before choosing the card, you should know which payment mode gives you more advantages: whether with fixed or variable interest rate.

At the end of the day, what will make you think is if you use a huge portion of your salary every month to pay less interest or get more laid back every month but have a debt for much longer. Consider paying the full amount of the loan, thus paying no interest.

Now realize that we are not joking when we say that credit cards do not exist to be used that way. You are supposed to pay the full amount you owe, leaving no amounts unpaid every month as this runs the risk of your debt incurring in the snowball effect, leading us to the next lesson:
Learn more: How does credit card payment work?

3. Credit card debt: only the professionals can help you


Do not waste time explaining your problems to anyone except 1) financial experts, such as credit counselors, or 2) people who have already gone through it. Even because most people will just say that they should never have gotten into this situation, nor do they ever use credit cards (which is not a totally safe move, since it will be more difficult to get a home loan without any credit history ).

Go directly to qualified professionals. A good place to start, in addition to your account manager for your financial institution, is the Association of Specialized Credit Institutions. Also, the financial consultants of are prepared to assist you and to take any questions you may have.


4. After all, you will be tempted to use the card again


4. After all, you will be tempted to use the card again


It’s like a hangover. Although he promises that he will not drink again, the chances of this happening are rather low.

There is a great temptation to ask for more credit limit for the card, especially if it pays weighs heavily on earnings you receive. Instead of making the sacrifice and paying what he owes, he ends up using the card again, contracting more debt.

Take our advice: if you have credit card debt, stop using it. Do not do anything with it until you’ve paid off the debt altogether. Then you can think of using it again. It is always good to know the good, the bad and the bad credit cards before using one.


5. Personal credit can help you lower your interest rate.


5. Personal credit can help you lower your interest rate.

In Portugal, personal credit has an average APR of between 10 and 15%. An idea to pay off the card debt may be to borrow a loan (assuming it is approved). It is true that you get another debt, but with a much lower interest rate. This is one of the functions of personal credit.
Read more: Credit card or personal credit: which one should you have?
But be careful, we are not suggesting that this becomes a habit – you will always lose money due to interest. But at least it will not lead to uncontrolled credit card debt.


6. Be more financially responsible


6. Be more financially responsible


Paying off a debt is a valuable learning experience. From here on out, you can tell the story of how you had a certain amount and how you managed to pay it.

On the positive side, most people who get out of this type of situation are more confident in managing loans and careful with their personal finances, fighting the reasons that cause us to fear credit cards.

And, if you did not know how credit cards worked before, you will come out of this situation as an expert in paying bills and time and overcoming excess credit card debt.

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