Published: November 16, 2016 | Updated: July 8, 2020 | Posted by: Carlo Miguel Castañeda | Credit Card
Getting a credit card is something of a rite of passage for some people. It might mean that you’ve got the financial capacity to handle the responsibility of having a credit card. Because it is a responsibility. It’s a big step towards eventually buying a car or a home because having a credit card means you’ll start building a credit score.
Seeing as this is your first card, there are certain things that first-time credit card users in the Philippines must know, and here are some examples of things that you should have in mind when you start looking for a credit card.
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All credit cards charge interest. The standard is 3.5% and some banks might charge either lower or higher than that, depending on the type of card.
This is the amount tacked to your bill if you don’t pay on time. Say that you’ve charged around Php 3,000 to your card, and only paid off about Php 1,000 on your billing statement for the month. When your next billing statement rolls around, you’ll find that you’ve got Php 2,150 due. The extra Php 150 is the interest, and this is compounded annually on the total amount left on your card.
It can be frustrating, which brings us to the next point:
Unless most of the items on your card were purchased on an installment plan, it’s more helpful if you pay the total amount on your statement as soon as it’s due. This eliminates the risk of compounded interest and having to pay way more than you intended on the items in question.
You’ll always want to pay on time because it keeps you in good standing – meaning there are no delinquent payments on your card – which helps your credit score along nicely. Paying on time also paves the way for a higher credit limit, though you should never spend to the limit unless it’s an actual emergency.
Issuers will update their terms and conditions from time to time, so make sure that you always read the documents sent to you. You’ll keep abreast of the conditions on your usage, and prepare you for any new fees that might be added to your account.
You’d also be made aware of other perks and rewards that your card has that you might not already know about. Some of these perks might actually surprise you.
The easiest way to find yourself in credit card debt is letting the card out of your sight, or giving out your credit card information casually. Preventing credit card fraud should be on the top of your priorities and the best way to do that is to always keep an eye on it, or swipe it yourself whenever possible.
If you’re shopping online, always make sure that you look for the Verisign logo or any other verification info on the website. You’ll also want to make sure that you don’t save your verification info on an unsafe browser.
When you don’t have a budget to work with, and seeing as credit cards won’t show you your purchases until the bill arrives, it’s best to list down every charge you’ve made with your card so that you know how much you’re spending every time.
This way, you factor it into your budget, and it helps keep your finances in sync.
A credit card is a great financial tool to use when you’ve fallen into the groove of paying off your bill on time, and not overextending yourself. Always keep in mind that every swipe isn’t free cash, but a loan that you take out against your next paycheck.