I have been a credit card user for almost ten years now. The majority of my transactions are dining out, grocery shopping, and baby/toddler stuff. Some people use their credit cards for emergencies. Others use their cards to book flights and accumulate miles. I know someone who applied for a credit card just to buy a TV on installment, and then never used it again. However you use your credit card, and for what reason, there are ways to maximize card benefits, while minimizing or eliminating any extra fees. Here are my personal Do’s and Don’ts of using credit cards:
- DO pay your credit card bill in full every month – I hate spending, so my credit card bill has not been historically high. The bank will tempt you to pay the minimum amount due, which is P500, or 5% of your total bill. If you have the ability to pay the full amount, do it. If you use the card for your budgeted needs and not on splurging on wants, you should be able to pay the full amount. Spend less than you earn and pay back what you owe are principles that apply to everyone.
- DO use it as much as you can – This doesn’t mean shopping spree. This is about accumulating as much points as I can within my budget and planned spending.
- DO use your points for cash credits/rebate – You can use your points to claim GC’s from retail stores, restaurants, or even hotels. I personally use my points for cash credits, which is basically cash that will be applied to your bill.
- DO take advantage of the promos – Some banks in the past have offered instant rewards such as a free Jollibee or Mcdonald’s meal for a minimum spend of P3,000. They can also offer discounts on airplane tickets, hotel buffets, and shopping items. There was even one promo where the bank credited P300 to my account just because I updated my contact information.
- DO monitor your bill and transactions at least twice a month to see if there are any discrepancies.
- DON’T pay annual fees – I have never paid annual fees. Annual fees can range from P1,500 to P5,000. This is a renewal fee to be able to use the card for another year. Whenever I was charged an annual fee I would call the bank to have it reversed. A couple of times they said they would reverse it if I spent a certain amount within a period. Since the amount was around my monthly credit card spend anyway, I complied. The other time I called, they just waived it on the spot. There was one year, though, that a certain bank did not allow a reversal. I simply had the card cut, since I had another card anyway. Never. Pay. Annual. Fees.
- DON’T have too many credit cards – Right now I only have two cards. The problem with too many cards is it is hard to manage all of them. There are so many credit cards offering different benefits and features. You just have to pick the one that most fits your lifestyle and spending.
- DON’T increase your spending when your credit limit increases – Banks will increase your credit limit periodically depending on your spending. Your credit limit, though, is not equal to spending power. I still stick to my budget and buy stuff only when needed.
This list has saved me thousands of pesos and unwanted stress throughout the years. Simply by maximizing the card features and avoiding unnecessary fees and penalties. If you want to know how much rebates and gift certificates I earned, read it here.