Sunday, February 12, 2017

Credit Card Tips

It has been a year since I had my first credit card. It all started with with a secured old credit card from BPI, in my desire to avail of their Imagine your Korea promotion wherein Gold and higher credit card holders have the chance of being granted 3-5 years multiple entry to South Korea. 

Fast forward. Along with a 3 year multiple entry visa to South Korea, came multiple credit cards. As Spiderman would put it, with multiple credits card comes multiple responsibilities. It was fun at first. I'm a Starbucks card collector and the idea of collecting multiple credit cards for the different designs came to mind. Further, the idea of being entrusted with a credit limit that I can use anytime at my whims boosts my self esteem. 

A credit card can be a valuable tool if you know how to use it properly.  Below are some tips I've read from various sites, adding more from my own experiences. 

1. Your credit card available limit is not your cash. Do not treat it as an extension of your buying power. Your buying power is your cash limit. Once you have your card swiped, consider the same amount of your cash to be no longer yours.

2. Pay the monthly due on time and in full. This is to avoid paying for interest. Paying just the minimum amount off your credit card balance each month will not only extend the time you are in debt, it will also significantly increase the interest you pay over that time.

3. Never miss a payment. If the above point can't be avoided, it is vital to make a payment of at least the minimum amount by the due date.

 4. Go for credit cards that offer free annual fee for life. If this cannot be avoided, ask for your annual fee to be waived; some credit card companies waive annual fees upon request or upon meeting certain conditions.

5. On installment:
- avail only if installment price is the same as the cash price (0% interest)
- avail only if you can afford to pay the full amount on the purchase date
- take the longest payment scheme possible but only if the last payment date is before your annual fee will be charged. This way, you get to be in a better position when asking your annual fee to be waived. 

5. Unless there's a minimum amount or purchase required, every peso counts. Use your card on each and every purchase that allows you to, provided you follow the previous points. 

6. Check the perks. RCBC Bankard offers unli 0% installments. Unionbank's Getgo Credit Card directly earns you Getgo points which you can use to redeem Cebu Pacific flights. Citibank Rewards card offers accelerated points rewarding system.  This is especially useful for those who have more than one credit card provider. On any given transaction, use the one that will give you better perks. 

7. If you have just enough money to make ends meet and without an emergency fund but with regular salary, get at least 2 cards, but make sure to follow the above advice. Having 2 or more cards gives you some sort of emergency budget. 

8. Treat your credit card information as confidential (Really, it is.)

The Good:

1. You get to keep your money at the bank for a longer period. This gives you:
- insignifcantly higher interest
- available cash in case of emergency

2. You get to receive discounts and freebies without paying for interest.

3. You get to fall in line less often on ATMs

4. In comparison to bringing cash, when you lose your cash, you lose your cash. When you lose your card, you lose a piece of plastic. Just make sure that you report it at the soonest possible time. 

The Bad:

1. You have the tendency to use it on purchases which you will not avail if you are on a cash basis.

2. You don't have the available budget but think you can swipe knowing your payday is drawing near. 

3. You see it as something to give you a better financial image among your friends.

4. You cannot say "No" to pressures of treating your friends even if you do not have budget for such.

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