Are you a first time credit card holder? I am sure you are excited to use it but beware because it is a trap to a large debt if you don’t follow these tips from ANC’s resident financial adviser, Salve Duplito, who shared some tips on how to use your credit card wisely.
1. Pay your bill in full every due date.
According to Duplito, paying credit card bills in full every due date is the only way for the user to take advantage of its rewards.
“The moment you can’t pay your bill in full, you are in trouble,” she added.
2. If you can’t pay your bill in full every due date, think about every day delayed as a major one.
“Do everything in your power to pay as soon as possible,” Duplito said.
Most credit cards charge 42% annual percentage rate or 3.5% per month. P42 of every P100 is paid in interest to the bank, which P42 of every P100 goes to the bank in interest.
“This interest accrues and is computed by most banks on a daily basis. Each day that you delay payment, drastically raises your interest expense,” Duplito added.
3. Check your charges every week.
For Duplito, checking your expenses every week should be treated with the same importance as spending time with your loved ones.
“If you are fond of Fri-date with your significant other, then make it your second most important date. Check your bank’s app or website together, and go through your expenses. This is one of the best habits you can learn if you want to be financially free for life,” she added.
1. Don’t swipe if you don’t know how much is already charged to your credit card.
For Duplito, one should only use their credit card if they know they can pay for it in full when the due date comes.
“In your mind, tell yourself that you only earn the right to use your credit card if you are aware of how much is already charged to it, and know that it is a number that you can afford to pay at the end of the month,” she said.
2. Don’t let someone else charge their spending on your credit card.
No matter how much you love the person, never let them charge their expenses to your credit card.
“If you love that person, avoid the awkwardness that comes with that moment he or she calls you and says, “Sorry, but I don’t have money to pay you.”,” Duplito said.
3. Don’t use more than two cards.
First-time credit card users are advised to only have one credit card to make it easier for them to manage their finances.
“As you get to know your credit card, you need to pay attention to your billing cycle, your due dates, finding the most convenient way of paying your bill so you can do it even on a very busy day, and the dynamics of being a very disciplined credit card user,” Duplito said, adding that developing the habit of being a disciplined credit card user becomes more difficult with two or more credit cards.
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