The introduction of credit cards significantly revolutionized the way we pay. It is like an instant wallet that lets you pay without bringing cash. We are actually borrowing the money from the credit card issuer every time we purchase an item using it and pay the amount we owe at a certain time. It is a very useful financial tool if used properly. It provides for our safety by allowing us not to carry significant amounts of cash. If you lose your credit card, it can be deactivated by reporting its loss to the card issuer. On the other hand, if you lose cash, it's gone forever. The credit card is also a very good source of funds especially during emergencies. If you travel a great deal, you can take advantage of purchasing an item without exchanging your bills with the local currency.
It takes a big responsibility for us to manage our finances using credit cards. They are sometimes misused giving us headaches and troubles. Usual calls from the credit card company or even having the account forwarded to a legal firm or collecting agents are signs that we are not making good out of our credit cards.
Here are some tips and reminders to make use of our credit cards to the fullest.
Spend only what you can pay.
Credit cards do not give us more money. We simply borrow an amount from the card company which we shall pay at a later time. Paying for things we can't afford using a credit card will only increase our debt. When credit is used excessively, it will lead us to unmanageable debts.
Pay all you can monthly.
You may think it is good to have yourself pay the minimum of your balance monthly but the issuer make far more money the longer you carry out payments. Most of the credit cards in the market today offers 3.5% interest monthly against the amount due if not paid in full. The interest is computed from the day a charge is posted to your account. When you carry a balance from month to month, you are actually paying two months worth of interest for the first month you failed to pay off your total balance in full. If you are a type of a cardholder that pays only the minimum, you would have paid more than the principal but you still have unpaid credit.
Pay your bills on time.
Even if you make a full payment for your bill, late payments always incur finance charges. Always make a reminder of yourself of your due date. Non-payment or late payment of the minimum normally incur additional charges.
Limit cash advances.
Most credit card companies impose finance charges and transaction fee on cash advances. Interest starts from the day of the transaction up to the time the advance is fully settled. Always check with your issuer the charges they impose on cash advances. Usually it's a percentage of your advances but sometimes it's fixed for a range of amount. Just imagine a P200 transaction fee for a P500 advance!
Check for good rewards program.
A credit card charges your account with annual fees depending on the issuer. Supplementary cards are charged half of that of the principal. There are credit cards that lets your earn points easily to waive your next year's annual fee. Aside from the annual fee waiver, some offers good rewards program that lets you exchange your points with free items. It is also an advantage if your credit card offers low installment rates.
Own two or more cards.
Having two or three credit cards, the most widely used are visa and mastercard, will save your face from embarrassment if your card fails to get online approval due to some reasons. Having different billing cycles or due dates will give you flexibility in meeting payment requirements.
Top Send Feedback
