Do you use credit cards?
There are so many people who fall in the trap of owning a credit card then getting in deep trouble because of debt.
Here are five rules how to manage credit cards properly
- Always pay all dues on time
- Don't pay annual fees
- Maintain two credit cards and get rid of the other cards you don't use
- Use the credit card with ongoing promos
- If you fail paying dues on time, stop using the card and revert to cash
Always Pay All Dues On Time
This should be the easiest to do. Because credit cards are so easy to use, people tend to forget that it is not cash but debt. We are not totally to blame. Credit Companies are to blame too. Once the monthly bills comes in our mailbox, credit card companies entice us not to settle all outstanding amount by showing the minimum payment required. My advice? Don't pay this minimum payment but rather pay all dues. Credit card interest are so high it will cost you money.
Another tip is to pay credit card dues a day or two days before the payment due date. If you pay credit card through online banking, the credit to your credit card company happens a day after your account is debited. So just to be safe, pay it earlier to give time for any errors. Besides, this will force you to use credit card wisely since you are paying before the due date.
Don't Pay Annual Fees
This is a no brainer. Don't ever let your credit card companies charge you annual fees. Usually credit card companies offer waived annual fees on the first year then will start charging it on the following year. If they do, grab a phone and threaten them of cutting your credit card if they are not waiving the annual fee. Some will offer using loyalty points in renewing the card but don't give in. Annual Fees should be free. Just be strong in your stand that you would rather cut your credit card than pay annual fee.
Besides, if credit card companies won't give in to your request, you can just apply for a new credit card. There are too many credit card companies offering waived membership fees out there.
I've been doing this scare tactic and it never failed me. Occasionally, the customer service will tell me that he/she needs to talk to his/her supervisor and will just inform me three days about my request. After three days, i'll see a reversal of credit card fees on my statement.
Maintain two credit cards and get rid of the other card you don't use
Why? Makes it easy to manage cards and remember due dates. I only use two cards. One Mastercard and one visa. I use my visa in my regular purchases while i use Mastercard for big-time purchases. Having just two credit cards makes it easy for me to remember that my card due dates are on the 14th and 20th.
Use the credit card with ongoing promos
Credit Card companies are battling for users so every now and then, major credit card companies offer exciting rewards. Before, BPI offered free Jollibee meals for every P1,500 single receipt purchase. Then HSBC offered free one tall Starbucks drink. This has saved me money because i get to earn free stuff doing my regular groceries. This is also one of my consideration in choosing what credit card to use. Whatever has the best ongoing promo, then i'll use that card.
If you fail paying dues on time, stop using the card and revert to cash
This advice is to avoid paying interests. One of my ways in managing credit card is immediately paying through online banking whatever purchase i've made during the day using the credit card. This is like treating credit card as cash. I only spend what i can pay for using cash. You may want to try this too to make sure that you settle all dues and avoid using cards.
Another is really managing cash. I don't pay credit card purchases immediately but sets up an automated payment through online banking. I make sure i date the payment a day or two before my payment due date. This way, i maximize the interest earning potential of my savings account.
Do you have other tips? Let me know
