Credit card is often described as evil. But, a smart way of using your card can actually make it as an amazing financial tool! Use it properly and you’ll never regret having one.
In fact, Visa study revealed that credit card usage among Filipinos keep on increasing over the years. Well, I have never doubted this report.
This digital age pushed us to adapt to modern online payments not only on different shopping websites but also in stores, gas stations, malls, and others.
Then, why are many Filipinos still afraid of using or owning credit cards?
Any tool, as long as it’s not managed properly, can be a burden. After all, it’s still debt. If one uses it for bad debt, it might lead to recurring charges, late payment fees, and others that can increase one’s total amount.
If you are a first-time credit card user in the Philippines, the best thing to do is to understand how it works.
We hope you can read the credit card FAQs below before swiping for your first purchase![lwptoc depth=”6″ numeration=”decimalnested” title=”FAQs on Credit Card” itemsFontSize=”12pt” colorScheme=”inherit” backgroundColor=”#f1f9fd” titleColor=”#024769″ skipHeadingLevel=”h1,h6″]
Credit Card: Quick Glance
What is the difference of credit card and debit card?
A debit card is linked to your savings or current account. You can use it for your online payment based on how much your savings or current account has. Meanwhile, credit card is dependent on your credit limit. Everything you spend within your credit limit must be paid on or before the due date.
What do we mean by credit limit? How much should I spend?
Credit limit is how much your bank entrusted you with the card. You can’t go beyond your credit limit. If your card’s limit is 10,000php, and your purchase is worth 12,000php, the transaction will be declined.
A common misconception is that the credit limit refreshes every month. The truth is, you can only go back to your 10,000php limit once you’re done paying what’s due.
First-time users usually start with 10,000php-20,000php. If it’s your second card, you will get a higher limit as long as you can show your proof of income or reference cards with higher limit.
Tip: It’s important to only spend what you can afford. Don’t be burdened with interest charges.
What do we mean by the details on the credit card?
Your credit card has four important details: name on card, issue date, expiry date, and CVV. When being asked of this information, you need to follow what’s on your card.
Let’s say your first card was approved on 11/22 (month/year) but you replaced it. The new card shows 12/23. Disregard the old card, and follow the new one. If your name has Maria, and it shows MA, put MA instead of Maria.
The most important one is the card verification code (CVC) or card security code (CSC). Among all the details, you have to be very CAREFUL in letting others know about it. If you can cover it for security purposes especially in stores, please do so.
Once others know your CVC, they can use it for online transactions.
Where can I use my credit card?
We have several types of card: Visa, Mastercard, AMEX, and JBC. Most stores accept Visa and Mastercard. When in doubt, always ask the store or read the online terms if your card is accepted.
Credit Card: Settle your Dues
What do we mean by statement of account (SOA)? How often we receive it?
Know your statement date for every card. Each has its own unique statement date. If your statement date is every 7th of month, all transactions from the 7th of the previous and current will be covered.
- Purchase made on September 28 – Part of October 7 Statement Date
- Purchase made on October 8 – Part of November 7 Statement Date
When should I pay my credit card due?
Due date is usually 15 to 22 days after the statement date. This is very important since it can lead to a missed payment or more charges. If your total due is 10,000php, you need to settle it on or before the due date.
Tip: Payment is usually posted within 3-5 banking days so remember to settle it earlier.
What happens if I pay only the minimum due?
Paying the minimum due will not lessen your debt. In fact, it will only add interest charges. Your card may have two charges: late payment fee and 2%-3% of interest charges.
I highly suggest to pay on or before the due date to avoid any penalties.
Credit Card: Perks
Will I get any rewards or points for my credit card transactions?
Although I’m not a fan of credit card rewards, it’s good to know that your card has promos or rewards usually included in your SOA. It varies from discounted prices, installment, tokens, cash back and others. You just need to be aware of what your card offers.
Aside from online payments, what other services does a credit card offer?
Good question! Each bank has specific promos to keep up with the competitive market of credit card. Below are some of the services you may take advantage of.
No Annual Fee for Life: Each card has a set annual fee, ranging from 1,000php-5,000php. However, there are cards that offer ZERO annual fee for life. No need to go thru the hassle of asking CS to waive it annually. Apply for Citi Simplicity Visa or Mastercard.
Cash Advance: Short in cash? You can withdraw cash from your card. Ask for the PIN so you can withdraw anytime. Banks have been very creative in terms of this perks. This time, you can transfer money from your credit card to any bank account.
Convert to Installment: Convert straight payment to installment at 0%. No need to call the bank as others use their mobile app. Some banks have interest charges.
Buy Now, Pay Later: I remember when I first used this at SM Appliances. Hahaha. I thought it was weird but I was indeed charged after 3 months. Check participating banks for this promo.
Referral Link: You can ask your friend to open a credit card using your referral link. You will get certificates, and others. Apply for Citi Simplicity Visa or Mastercard.
Financial Freedom Tips
How can I maximize my credit card?
Your credit card can help you in many ways. I honestly got my first card for the sake of having it. I mean, it was offered by my employer so who am I to refused?
Over the years, I realized that it can be used to any of the following:
Boost credit score: Establish your credit score. Be a good payer, and build relationship with your bank. Pay on or before the statement date, preferably twice a month. Always pay in full. Use your credit history as a reference to your future car or home loan.
Health emergency: In case your health card is not enough and you’re waiting for your insurance claims to be approved, you can use your credit card to settle the bill.
Business fund: For emergency, you can use the cash advance facility or even online purchases especially for buy and sell ventures.
Big purchases: If you plan to purchase items with high prices, it will be dangerous to bring cash. Use your credit card instead and pay it immediately.
Maximize the potential of your credit card! It’s not evil after all.
Post your comment or share your learning.
Want to apply for your first card? Go for Citi Simplicity.