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Best Time to Use Your Credit Card: Guide for every Filipino

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Planning to get a credit card? Getting a credit card is one of the wisest decisions of anyone who knows how to manage credit and able to use it to their advantage. As long as you understand how and where you’re going to use that, maintaining a card or two is good.

What is a credit card?

It is just a card made up of plastic issued by the bank for you to use as a substitute for cash. Technically, the bank will lend you money up to the predetermined amount or the so-called credit limit. Since you are now the borrower of the bank, it will carry the risk of default or nonpayment.

I grew up in a family that doesn’t use any credit card. From grocery to tuition fees, everything is in cash. We have this prenotion that if you want to be financially broken, use credit cards. Also, I used to believe that this is the evilest product that a bank could offer due to its hidden charges and high-interest rates. These prejudgments are somehow correct for some but arguably incorrect in terms of hidden fees. Charges are always disclosed and available on their sites or in your monthly billing statement. Yes, there will be high interest if you don’t pay the full amount on the due date.

Why banks charge very high interest?

increasing interest rate

It’s because, in exchange for the immediate access for a personal loan, they will charge a higher interest for uncollateralized loans to compensate for the risks.

I listed below are my simple hacks on how to manage your credit cards effectively.

Source of the short-term loan at zero interest

This is the principal purpose of a credit card– to defer payments. People may think that when credit card companies can earn from you through charging high interest and other charges every swipe or tap. This is true for the who do not settle their outstanding balance. Nevertheless, if you’re a wise spender, you can enjoy more than a month of credit without paying any interest.

loan approval

Example:

Say your Statement date of the card is every 10th day of the month, and your spending up to that day will be paid after 20 days from Statement dates or on the 30th.

You bought something and paid it using your credit card on March 11, and it will just be included in your statement of account on April 10 and will become due on April 30. Imagine that, you deferred the payment for 50 days at zero interest. Amazing!

Pay your tuition fee through cards

credit card

It is related to number one. If you’re like me who sends students at school, the map will assist you in paying tuition. There is a lot of universities nowadays who already have credit card terminals at their cashiers. Currently, I use 2 cards, the HSBC and Metrobank in paying for the tuition fee, I ask the cashier if she could split the payment into two. For instance, If the current installment is 10,000 Php, I can ask if we can charge 5,000 Php for each card instead. Why do I do that? It’s because I am not that an active user of another card, thus, to have a transaction, I need to charge at least once a month. Since the payment has been split, I can now have different due dates.

On top of that, each card earns reward points. Further, for the amount charged to HSBC card, I can apply to convert that into 3 monthly installments at 0% interest! Yes, that’s free! For the Metrobank Card, in every payment of more than 2,000 or 3,000 pesos, you’ll get freebies such as Mcdo e-gift or electronic gift certificate worth 100 pesos or 100 worth of SM gift certificate. You’re welcome. 😊

Earning rewards points

deals online

Every credit card company has a different style of rewarding its cardholders. Some give one reward point for every 30 pesos spending, which you can convert to different kinds of goods or services from their rewards catalog. Of course, most of these cards coming with reward systems come with annual fees.  Don’t worry, most of the cards have a free annual fee on your first year.

Further, you can use your earned points in paying that annual fee. The annual fee is from 1,500 to 5,000 pesos, depending on the type of your card. If you’re holding a Platinum card can enjoy more rewards than those who hold classics; thus, the annual fee is also higher. You can also request the bank by calling them on how you can waive that; most of them will ask you to spend using that card for a certain amount within a given period, e.g., 20,000 for one month.

Get rebates or cashback

buying online thru credit card

Many credit card companies nowadays offer rebates on their grocery and fuel consumption. If you’re a heavy consumer of that commodities better off to get one with that kind of feature to enjoy it. One bank I know that offers this kind of perk is the Security bank. Imagine you have a retail store; you’ll get an additional 5% on your purchases when you use the card which you’re going to pay the following month. That’s how to leverage your cards.

Establishing your credit rating

credit card usage

If you’re a good payer, you will, of course, be rewarded. If the bank sees that you religiously pay your amount due, they will trust you more you by increasing your credit limit. Sometimes they give special offers to their valued customers like payment deferrals and the like. Another important thing, if you apply for a long-term loan like housing and car loan, you can get quickly approved if you have established a good credit score with the bank. Your credit history, including how you settle your credit cards, will be used in that kind of loan.

Enjoy deal and offers

limited time offer

This is what I like the most, merchants tie-up with banks for marketing purposes, which can be used by its cardholder. For instance, 30% off for the minimum purchase of that, 20% off for every purchase of that. You should visit from time to time the promotion page of your credit card providers. Some credit card companies like Citibank offers free lounge access if you are a frequent traveler.

Buying something online

deals online

The payment method that is acceptable most of the time is through credit cards. This is, I think, the most convenient way of paying online. Even when you book a flight, sometimes airline companies give tied with the banks to provide you with a discount when you use the promoted cards. Online shopping site like Zalora gives 12% off if you purchase with your BPI cards plus  3% off when you buy on the 15th and 30th.

International Purchases

swiping credit card

If you are a frequent traveler, sometimes it’s cheaper to use your card in paying to take advantage of the conversion difference. Instead of buying the currency here at a higher price in the Philippines and use them when you shop in the other country. Another minimal crossborder fee will be charged to you. But based on my Korea Trip, it’s cheaper to use my card instead of paying in cash.

Buying significant money in the mall

malls credit card payment

This is more of convenience. Imagine you will be purchasing an entertainment set in the mall, amounting to 150,000 pesos. Instead of bringing that significant amount of cash with you, you can pay through credit card. They might even offer you a deal to defer the payment into 6 months at 0% interest. If that happens, go for that.

In case of emergency

emergency kit

Hoping it won’t happen to everyone. But in case of emergency, the credit card can be your back up instrument. Hospitals and clinics nowadays accept credit cards as payment for your bill. 

A Peso Tip:

icon

A credit card is advisable for your purchases of goods and services but never be for a cash advance. Why? You will be charged for a fee for around 600 and up plus 3 to 4% monthly interest of the amount due. I tried this before, without reading the fees, not because I don’t have cash but because I am just curious. As a result, for the 2,000 pesos I borrowed, I paid 2,675 pesos for that even if I paid on time.

Conclusion:

Based on the benefits mentioned above, I hope you know now what you can get from a wise usage of it. It will only be a source of the problem if you don’t know how to handle your finances. The problem is not the card itself but the user instead. The system on how credit cards work is given already. It always depends on you on how you will manage that and outsmart the existing system by making it to your advantage.

If you think you cannot maintain one or two credit cards believing that you will just be tempted to swipe that to satisfy your wants. It’s not wise to have one.

Related article(s):
Pros of Having a Credit Card every Filipino MUST Know!

You, any other tips, on how you manage your cards? You can comment and share your thoughts down below.

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