8 Tips on How to Use Your Credit Card Wisely Whether for Business or Personal

While credit cards have their many advantages, the lack of knowledge in using them has become a bane to many consumers who find themselves deep in debt after a season of uncontrolled spending.

The BSP Financial Consumer Affairs Group The BSP Financial Consumer Affairs Group give these 8 helpful tips on how to use your credit card wisely:

1. Read the fine print. Familiarize yourself with credit card terms such as credit limit, total amount due, minimum amount due, and finance charges. Remember, if you don’t understand the language, credit card offers and statements could lead you to deep debt. Read and understand the credit card’s “terms and conditions” before you use it.

2. Spend as you earn. It is only sensible to avoid spending more than you are earning. Overspending could lead to financial quagmires for you and your family.

3. Keep track of your spending and do not exceed your credit limit. It is important to make a list of your expenses so you could set aside money come payment date. Always retain receipts and check them against your billing statement. Immediately report any discrepancies to the card issuer.

4. Distinguish what you want from what you really need. Impulse buying has a lot of consequences: You end up with a lot of useless stuff that you still have to pay for.

5. Pay your bills in full and on time. If you fail to pay at least the minimum amount due on or before the payment due date, a late payment fee will be charged to your next billing statement. Some issuers charge a fixed amount while others charge a percentage of the minimum payment (e.g. 3 percent to 5 percent). If you cannot pay your total amount due in full, pay as much as you can. If you maintain more than one credit card, pay the one with the highest interest rate.

6. Pay more than the minimum amount due. Your credit card can be a very expensive form of credit if you pay just the minimum amount due every billing cycle. Card issuers usually require a minimum payment of 5 percent of the outstanding balance billing cycle such that a P5,000 balance could mean that you can choose to pay only P250. But once you do so, the remaining balance of your outstanding credit card obligation will then be charged a “financing fee.” Assuming that the fee is 3.5 percent a month, this translates to a whopping 42 percent annual interest rate!

7. Make sure your payment arrives on time. When paying, provide allowance for posting of payment to ensure that your payment is recorded on time.

8. Guard against credit card fraud. Ensure that the transaction on your credit card is done in your presence. Also check your card upon return by the cashier to ensure that it is yours and that it has not been tampered with in any way.

I hope these tips will help and guide you to wisely use your credit card even if it is a low-interest credit card.

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