Financial Health Financial Planning Savings and Investments

No Worries with Credit Cards

Credit card

Are you a credit card holder?  Do you love swiping them every time you spotted a new pair of shoes, or a very fashionable bag, or the latest Apple gadget? Have you ever experienced paying Interest/Finance Charge or Late Payment Fees because you were not able to pay, at least the minimum amount due, on time?

If you are to ask me, then my answer is a big YES!  But that was before. :)

I remember the first time I pay for these two charges…  Straight from the bank, I just found myself inside our bathroom, doing the “walling”, crying  and shouting, “ang dumi dumi ko!!!”  Kidding aside, I was really devastated with that experience.  That’s why I want to share with you my learnings thru this article, so you’ll have the option to not experience them anymore.

Credit is good, but please, please, please… PAY IN CASH if you think you cannot manage paying all the amount due on due date. If you failed on the 1st month, chances are, you will find yourself failing every month.  Your charges will then accumulate, outstanding balance will zoom up, and soon you’ll develop a phobia on answering calls from unregistered numbers thinking they are a customer representative or a lawyer from credit card companies following up your payment.

Instead of credit card companies taking advantage of you, why not take advantage of them?!

Me and my wife are both Financial Planners. We see to it that we practice what we advise to our clients. With that, we want to share with you our credit card habit that might also work for you.

  1. Maintain a bank account used solely for paying credit card. You’ll see later how this works.
  2. We only use credit card to buy for our fixed monthly expenses, such as diapers and milk for our kids and postpaid bills. We then ensure to transfer fund online that night from our savings/payroll account to the bank account mentioned in #1.  This creates no hassle upon due date as payment for the credit card is readily available on your account.  This also avoid spending your available cash for other items not part of your priority expense list.
  3. Since there’s always an exception to the rule, we sometimes use our credit card to buy high value items such as equipments and new gadgets.

Advantage:

We get reward points that accumulates which can be converted to Gift Certificates/Vouchers.

Freebies are given by credit card companies if you use credit card in paying a certain amount like at least P2,500, P6,000, or P12,000.  Most common are value meals from known fast food chains.

We can avail of installment payment.

  1. We never use credit card for “spur of the moment” purchases. This ensures that we only buy items that we can AFFORD to buy at that moment, since we have cash to pay for them.

Truly, usage of credit card is a test of self-discipline.  But managing it is not impossible.  Credit Card is not bad at all, it’s just a matter of perspective.  Spend wisely, and spend only what you have. Live within your means, and there’ll be no more worries with credit card.

For any inquiries or for Free Financial Planning, kindly leave your comment here or send me a private message thru my fb page  www.facebook.com/mannypascualpagaduan

 

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