How to properly use that plastic
APPLYING for a credit card is confusing but more questions come once you own one. Luckily, Ms. Salve I. Duplito, president and chief executive officer of Empower and Transform, gave tips from applying to owning a credit card.
THINGS TO CONSIDER WHEN APPLYING FOR A CREDIT CARD:
Budget. Don’t get the kind of cards that charge you P12,000 annual fee and be careful that you only get the ones that fit your budget.
Know the reward system. There are many options, and you have to be careful that you know which ones you really need and where you will maximize all of these benefits (e.g., cashback rewards, gas rebates, miles points, etc.).
Convenience. Think of the worst-case scenario and make sure that your credit card company is convenient to you in case of that emergency.
Good security feature. Make sure that the company has the resources to cutting-edge technology that they can protect you from hacks.
Good customer service and flexibility.
TIPS FOR NEW CREDIT CARD OWNERS:
• A credit card is not an emergency fund.
• For beginners, don’t get more than two credit cards.
• Teach yourself to pay your credit card bill in full three days before the due date.
• Know your credit card cycle.
• Maximize your credit card rewards.
ADVICE FOR LONGTIME CREDIT CARD OWNERS:
• Make use of your credit card cycles to get longer days of free money before the bank charges you.
• Maximize your rewards. Know when it’s better to swipe than pay in cash because rewards are like money for those who know how to use their cards wisely.
• Be very careful of cash advance. The moment you get the cash, you start paying interest.
• For those affected during the pandemic, check for debt relief programs with your credit card company to help you pay off your debts.
FIVE THINGS YOU SHOULD HAVE OR BE BEFORE APPLYING FOR A CREDIT CARD: • You need to have a proof of billing under your name.
• Have your own income to pay for your bill.
• You need to be financially educated to know how credit card works.
• Make sure that you don’t have some existing unsustainable debt.
• You need your own identification cards and signature.
ON LATE PAYMENT FEE AND INTEREST:
Both are types of payment for your unpaid credit card bill, Ms. Duplito said. Late payment fees apply when you couldn’t pay a single peso after your due date. Meanwhile, interest comes in when you don’t fully pay your bill upon the due date and whatever is left (called a rollover) will be charged an additional 2% interest per month. The catch is, the next month you roll over, you will be paying 2% interest on whatever’s unpaid plus the interest it accumulated (also called compound interest). — Bernadette Therese M. Gadon
For more tips, check Ms. Duplito’s Money University by SalveSays on Facebook, and follow @SalveSays on Facebook, Twitter, Instagram, Kumu, and TikTok.
