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In 2013, there were around 7.5 million Filipino credit card holders. This number is expected to rise due to the increasing numbers of middle class and the continuously improving economy. Unfortunately, just because you own a credit card doesn’t mean you instantly have money to spend. As a credit card holder, you should be financially responsible: analyse if you’re using your card properly.
You can easily max out your card without noticing. You should at least know the dos and don’ts of credit card use to avoid falling into debt:
Credit Card Dos:
Take advantage of seasonal promos – During the gift-giving holiday season, most people go to malls and stores to buy their loved ones gifts. Instead of using cash, use your credit cards to purchase items. During the holidays, credit card companies typically offer additional perks and rewards to their clients. Take advantage of such offers to cut down on prices or receive discounts.
Control your impulse – Resist the temptation to splurge and make wise decisions about the items you’re purchasing. Do you really need it or do you just want it? Remember: you will inevitably shoulder the consequences of your financially unsound credit card purchase decisions.
Choose cards with affiliated stores and establishments – In case you want to apply for a new credit card, choose a card that is affiliated with establishments you frequent. BDO’s Forever 21 Mastercard, for instance. This card offers a lot of great freebies, including free membership fee for the first year and shopping perks from Forever 21, which makes the card ideal for women who love shopping at that particular store. Shop at any Forever 21 branch in the country and you’ll earn more points. You’ll also get a birthday present: 10% discount on selected items on the day.
Keep your balance low – Stay within 30% of your credit limit to maintain a healthy credit score. Keep your balance low because your debt is a significant factor in your credit history.
Analyse your billing statements – Check and go through your credit card’s transaction records to make sure your bill is accurate. In case you find a dispute in your statement, call your bank immediately. According to the Credit Card Association of the Philippines, most banks will either call or send a message to notify the clients about transactions made.
Take credit card precautions – Always remember to safeguard not just your card, but also the information about it. Don’t perform online transactions in public and securely logout of your account from any websites that may contain your credit card details.
Credit Card Don’ts:
Don’t use your card for every transaction you make – Always prioritize the transactions made with your card. Instead of using your credit card, it is almost always better to pay with cash or debit card for ordinary purchases.
Don’t pay off just the minimum required – You’ll increase the interest you need to repay and take longer in settling your entire debt if you only pay the minimum amount required. Try to clear as much as possible monthly.
Don’t be too luxurious – A credit card is not a license to buy things you cannot afford. You’ll have a hard time repaying your debt if you keep buying more than you can afford.
Remember, owning a credit card doesn’t make you rich. Each swipe is considered a loan – utang, in Filipino. Before you make any purchase, think twice and make sure you have the capacity to repay the amount you will owe. In addition, your credit limit will reflect how much you can charge to the card, so be responsible when using it.
Bonus Video: Common Credit Card Myths
Photo Credit: moneymanagement101.org