Used correctly credit cards can get you discounts, rewards and be a genuine asset to your monthly finances. Used irresponsibly however and they can become a heavy financial burden. Here are 5 useful tips for Filipinos to make credit cards work in your favour.
1) Use your credit card for most purchases.
This one only applies to people who pay their balance in full each month. Using your credit card more frequently means you can build up reward points faster and enjoy perks such as free movie passes, airmiles for free flights, or receive gift and cash certificates that you can use in grocery stores or retail outlets. That’s free money you wouldn’t have if you made your purchases using cash.
2) Choose a credit card that gives you what you want.
Credit cards in the Philippines have different types of rewards, it’s a good idea to choose one that will be beneficial for your lifestyle, here’s some examples.
If you love shopping – choose a credit card that offers you the most cashback or rewards points and look for cards that offer rebates at your favourite shops.
If you spend a lot of money on fuel – a card that offers the biggest fuel rebates might be best for you. Eastwest bank and Security bank both have credit cards with a massive 7% fuel rebate.
If you love to travel – the HSBC premier mastercard is the market leader at offering airmiles and travel perks with 1 airmile rewarded every time you spend only 25 pesos. Look for banks that offer the smallest spend for the most airmiles while maintaining other perks such as free travel insurance and free access to airport lounges.
3) Keep an eye on your payment due date
This is where things can get financially ugly for some people. Your card issuer will send a paper or online statement every month showing you the total amount due and the payment due date. If you don’t make any payment on or before this date you could be charged a large penalty fee so make sure you always settle at least the ‘minimum amount due’ every month. Preferably you should always pay off the full total balance so that you will have zero interest charges.
4) Don’t withdraw cash on your credit card
Although sometimes it might be tempting, a cash advance, which is withdrawing cash from your credit card account should be avoided at all cost because it’s a very expensive form of borrowing. Credit card companies intended the cash advance service to be used for emergencies but some people The moment you withdraw cash your card issuer hits you with a fee of about 500 pesos or 2-4% depending on which one is higher. What some Filipinos don’t realize is that you’re also charged interest from the day you withdraw the cash to the day you settle, so there’s no interest free period. Lastly you should check what you cash advance limit as this is usually different from your credit limit, for example if your credit limit is 100,000 pesos, you may only be allowed to withdraw 30% (or 30,000 pesos) in cash. If you withdraw more than this amount you could be charged an over limit fee.
5) Always check your credit card billing statement each month
Honest mistakes do happen, the pump attendant might have mistakenly charged your credit card twice or perhaps the checkout lady entered the wrong amount, it’s best to keep your day to day receipts and compare them to your credit card statement each month to make sure there’s no errors and that statement due amount is correct.