The Wallet: Paying in installments or in cash, what's better to avoid more debt?
In installment payments, it is common to use a bank credit card. Photo: Istock
TL;DR
- The best payment method is not universal but depends on personal financial analysis.
- Credit should be a central financial tool, used strategically and responsibly.
- Key variables for decision-making include interest rate, type of expense, liquidity, and financial load.
- Pay in cash if you have sufficient liquidity, a reserve fund, high financing costs, or for non-value-generating items like clothing or technology.
- Consider paying in cash if you have significant existing debt or if there are discounts for this method.
- Financing is suitable for low or zero percent interest rates, especially for investments like housing and education.
- Always verify that the price is the same for both cash and installment payments to ensure no hidden financing costs.
- Maintain liquidity or invest in items that generate value when choosing installment payments.