Saturday, November 17, 2012

Credit Cards 101

Citibank. BDO. HSBC. RCBC Bankard. East West. Visa. Mastercard. JCB. Amex.

I had my first ever credit card two years ago under my name. Yey, I no longer had to rely on daddy's supplementary card anymore - not.

I thought having credit cards was easy.
Desirable (desire and buy - hahaha)

But I found out that it's not.

You need to be careful as you need to make sure that everything is correct. Make sure you sign the charge slip with the correct amount. And when making online purchases, double check everything before pressing the pay button.

Responsibility is very important when having a credit card. It's such an embarassing situation if someone calls your office asking you to pay your bills. Believe me, the collectors are heartless people. Not that they ever looked for me since I ALWAYS pay my bills in full.

And yes, having a wallet filled with credit cards can be distracting. If there's a sale in a mall I happen to visit, impulse shopping is my greatest weakness. And keeping track of how much I charged into each card gives me a migraine.

So here are a few tips on how to attain and maintain a credit card.
  • I got my BDO credit card a couple of months after I opened an account with them. It's also my most useful and friendly credit card.
  • Don't pay for annual fees (unless you're super happy with the services and perks of that card). Credit card companies usually give the first year of membership free. For the succeeding years, ask them if they could waive the fee. Usually, there's a minimum purchase required (for BDO, you need to charge at least P9,000 on the last three months before your card expires) or you just need a good credit standing.
  • Always pay in full (if you can). Interest rates range from 3% to 3.5% a month. I tried not paying in full before just to see how it goes. So my total bill was P13,000, I paid P8,000 and they charged me P800 - that's a pair of shoes on sale! After that, I made sure that I pay up to the last centavo (I sometimes pay an excess of P20-P50 depending on the total). A good credit standing can take you places, and I heard you can easily get a loan should you need one in the future.
  • It's nice to know that you can make a purchase and be billed for it after a couple of months or pay for it in 6 months or a year. But remember that when you do that, you consume a portion of your credit limit. Let's say your limit is P20,000 and you go on a shopping spree and spend P12,000 payable in 6 months, by the end of the billing period, assuming that you did not buy anything else, you only have P8,000 to spend. And let's say you already paid the first month, which is P2,000, you will have P10,000 to spend for the next month. Basically, you can use your card more if you have paid the installment completely. So if let's say you made two P10,000 installment purchases, that card would be deemed irrelevant for the first few months as you cannot use it for purchase anymore. So in this case, you can only charge the amount you paid. You paid P5,000, you can charge P5,000 to the card.
  • Know the promos. There are several promos where you can get discounts of freebies. I was able to redeem over P500 worth of GCs from SM and I also got free movies (actually, just a discount of P100) and some snacks from fastfood chains. There's nothing you will lose except money if your  way of thinking is if you buy more, more freebies (guilty! But I learned from it, I'm not that crazy anymore).
  • There are many payment centers in the metro today. You can even pay for all of your bills in SM. But make sure you pay 3days before your due date as it may take some processing time for the payment to be received by your bank. However, there are several instances that I pay on my due date. And so far, no negative implications yet.
With Christmas just around the corner, and Christmas sale events on the horizon, just remember that credit cards are a good thing but it may lead to bad things. Make sure that you are the one controlling them and not the other way around.

Enjoy your Christmas shopping!

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