First of all, the credit card can be a great ally when used correctly. Thus, with good financial planning, it is possible to make purchases in installments without going through any trouble with payments. But, do you know how credit card installment works?

So, today we are going to address this issue, in addition to other important points about installments. This way, you understand how to make your card your best friend and avoid losing control of your finances! Want to know more? Continue reading below!

First, the financial institution provides a credit limit for the cardholder. This value is unique and can be used for purchases in cash or in installments.

So, when making your purchase, you have the option of paying the total amount in a single installment or dividing it into fixed monthly installments. If you choose the second option, the amount paid for the product is committed until all payments are made. 

A common mistake among people who own credit cards is to believe that the available limit is there to be used in full. Thus, they end up acquiring debts that go beyond their monthly income and, as a result, they are unable to pay their bills. 

So, buying in installments can also be a problem if you don't understand very well how it works. So we brought some tips to help you with this issue. That way, you do your shopping with the certainty that you won't have headaches in the future! Let's go?

First of all, it is important not to fall into the temptation of making too many installments, especially if your card limit goes beyond your monthly income. This is because the amount made available to you by the bank works as a loan and you need to return what was spent by paying the invoices.

In this sense, paying for a purchase in installments means having money you don't have yet. Financial unforeseen events happen and the non-payment of an invoice with multiple purchases in installments can turn into a huge snowball.

Therefore, before requesting the payment in installments, check that the monthly amount fits into your budget and calculate all the variables so that, even with an unforeseen event, you are able to pay in full and on the due date.

Also, give preference to cash payments and only use your credit card in case of emergencies or if you need to buy a product with a high value.

First of all, you need to keep an eye on your card balance when making an installment purchase. This is because the installment commits the limit until you finish making all the payments. 

Thus, if your card limit is R$2,000.00 and you purchase R$1,500.00 in ten installments, you will only have R$500.00 available for future purchases. The bank restores the amount of the installment through the payment of the invoice, but you can only recover the total limit after paying off the purchase. 

In addition, it is only possible to make the purchase in installments if you have the total value of the product available at the limit. Otherwise, the purchase is not authorized. 

Well, your invoice has arrived and you don't have enough money to pay the full amount. So what to do? Paying the minimum amount sometimes seems like a good way out, but it's not! That's because credit card revolving interest is usually very high. In addition, you will have to pay the remaining amount of the invoice and the installments due in the following month.

So run away from the minimum card payment! If you cannot borrow the full invoice amount from a relative or friend, apply for a personal loan. This type of credit usually has lower interest rates and can be a good alternative when you’re in a tight spot.

Without a doubt, getting a credit card these days is no impossible task. Knowing this, banks and card issuers need to innovate to attract the attention of potential customers and, for that, they offer several benefits.

In that sense, be aware of your card's reward programs. Some banks offer cashback that can be exchanged for a discount on the bill, as well as miles programs, discounts on cultural programs and partner stores. 

Remember that good financial planning also prevents you from having to pay fixed bills (water, electricity, internet, etc.) on your credit card. This practice should be avoided at all costs because, in addition to the card company charging a fee for it, you will have the same expenses to be paid the following month. 

But, then, when should we use the card for installment purchases? The answer is simple: when the value of the product exceeds your cash payment capacity. However, it's not that simple!

Before making the purchase, put the value of the installments on the tip of the pencil and assess whether you can afford the payments. If the answer is no, don't risk it. 

If the purchase in question is not an emergency, try adding the amount to buy in cash in the future.

So, if the financial situation tightens, is it worth paying the card bill in installments? No way. This is because the interest charged in this type of installment is among the highest in the market and second only to interest on revolving credit cards. 

In this sense, look for other alternatives to pay your debt. Retirees, INSS pensioners and public servants can use the payroll loan. This line of credit has special payment conditions, in addition to the lowest interest rates among available bank loans. 

But, if you don't fit into these categories, talk to your bank manager about a personal loan. Although not the ideal option, interest on a loan is much lower than credit card interest.

Also, see our list of the best loans with the lowest interest rates below.