Pocket finances. Become an expert of your worst enemy: debt.

Now, you might think I've completely lost my mind. It's possible that I'm getting closer to that every day. But between you and me, normal and sane people scare me. The point is that in today's post, I have a clear mission. I want to convince you that you can benefit from debt.

In this specific case, debt associated with the dreaded credit cards. If this is your first time visiting my blog or encountering Pocket Finances, I advise you to start with previous chapters. Spoiler alert: this one is for advanced students. Don't rush into today's juicy details right away. It's better to slowly transform yourself into a magnificent saver.

Rome wasn't built in a day.

Saint Augustine

Proceed with caution

When we introduce credit cards into our lives, we need to be cautious. The solid ground of cash or debit cards becomes a treacherous territory. If you're not organized or don't have a budget, stop reading now.

However, if you're really up to date with your expenses and know where your money is going, this can be a good point to exploit and gain benefits. Let's take a look at the advantages and disadvantages of credit cards. If you want to get close to your enemy, it's better to understand them thoroughly.

Cons of debt

1. Altered awareness:Many people feel like they're not spending money because it doesn't disappear from their account in a matter of minutes or days. Since we keep our income and expense budget up to date, we have this point under control.
2. Potential interest: If you don't know what you're signing up for, you could end up with credit cards that accrue interest, causing your debt to snowball downhill. You'll start reading the fine print of the credit cards you apply for (or read my periodic recommendations instead). You'll always opt for cards with zero interest, meaning full payment at the end of the month.
3. High maintenance and issuance costs. Some banks offer credit cards that are initially free. The problem arises when the second year comes around, and you're hit with maintenance fees. This won't be a problem if you read the terms of your cards. You'll only choose cards without associated fees. Not just for the first year but forever. Or ones with easy-to-meet conditions for fee waiver, e.g., spending €50 with the card each month.

Pros of debt

1. Generator of fictional money: To avoid falling into the bottomless pit of credit card debt, I like to think that the money I've spent with those cards is no longer mine. It's not mine anymore. However, it still shows up in my account. Instead of being a hindrance, I use it to my advantage by earning interest. I have a savings account, like the one I told you about Sabadell Bank , which gives me a 2.5% interest on the average balance. In other words, that money is no longer mine, but it still counts toward calculating the interest they'll pay me at the end of the month.
2. Associated benefits: Precisely because many people fall into the credit card trap, banks will want to convince you to get theirs. Because you're a potential victim. What they don't know is that it's impossible to deceive you. Since they want to convince you, they offer to give you back a percentage of what you spend with their cards to use in specific stores (like Ikea Family) or directly deposit into your account (Sabadell cardI swear they're not paying me, but I've loved their promotions in recent months).
3. Free insurances: Some banks offer credit cards with associated insurance. These cover various scenarios, such as event cancellation, flight delays, or late deliveries. You need to be clear on what's included and use that card to pay for flights, tickets, or whatever is appropriate.

Keep your friends close, but your enemies closer.

Vito Corleone

Take notes

Last but not least, make sure to jot everything down. Now that you know the advantages and disadvantages of your credit cards, it's time to note down everything when you apply for a new card.

I note the date of application, the expiration date of associated promotions, the benefits I get from using that particular card, and the requirements I need to meet to maximize its benefits. It's also important to know which billing period it includes and which bank account it's associated with.

You can add a tab to your Excel budget file. If you don't have a budget yet, don't wait any longer. I provided you with a template to make it easier for you to get started. Begin improving your finances today.

See you soon and happy reading!