Thursday, November 14, 2013

Frugal Tip No. 8: On Credit Cards

It's been a while since the last time I posted a frugal tip. =)

Now, I want to share some of my tips on using credit cards:

Photosource: From Google

1. Limit the Number of Your Credit Cards

One or two credit cards are enough because it is very hard to maintain and monitor if you have too many cards cards. Aside from that, the more credit cards you have, the higher the chances you will be tempted to spend.

Before, I used to collect credit cards. Name it! I almost have a credit card from each bank - HSBC, Citibank, Union Bank, Standard Chartered, Eastwest Bank, etc. I don't actually use them all. You know, just a collection. Also, I get thrilled every time my credit card application was approved.

Later on, I became mature already. I just cut the number of my credit cards to 3.

2. The Primary Use of Your Credit Card Should be for Emergency Purposes Only

As much as possible use cash on your purchases. At least, you don't need to worry about paying something in the future, right?

The problem with having credit cards is that you'll have a tendency to think that you have an immediate cash that you can splurge anytime. If uncontrolled, will later on put you into trouble. That's why if you have a credit card, you should only use it for emergency purposes only.

3. Make Sure You Have a Ready Cash to Pay for Your Credit Card Purchases

If ever you use your credit card, make sure that you have an available cash to pay for it. Not the other way around - the thinking that you'll have a money in the future to pay for it. What if something bad happened like you lost your job or you need some money because there's an emergency? I'm sure that you'll be dead broke and you won't be able to pay your credit cards which will later on make you heavily indebted because of high interest rates and various credit card fees.

4. Use Your Credit Card to Your Advantage

Credit card companies are very competitive now-a-days. They have different form of gimmicks to attract credit card holders to use their cards. There are instant rewards, rebates, points, etc.

I use my credit cards to my advantage. I take note of the promos available for each of my card. Applying Tip No. 3, I just use my credit cards just to avail of their promos. Because of that, I get a lot of freebies such as gift certificates, meals, drinks, etc. Isn't that great that you get something for free from your purchases?

5. Always Request for Waiver of Annual Fees

Credit card companies usually charge you for annual fees both for principal and supplementary credit cards which you could request them to waive.

Your request will have a better chance of approval if you are a good credit card holder. Meaning, you religiously pay on time and in full. Sometimes, they will just give you options in order for them to waive your annual fees such as using your accumulated points, subscribing to their e-statement, utilities payment enrollment, giving you spending requirement, etc. In my case, I usually choose the spending requirement option.

Then if they don't agree to waive your credit card annual fee, you can just have your credit card cut since it's very easy to apply for a new one.

6. Pay Your Credit Card Bills on Time and in Full

Make sure to always pay your credit card bills on time and in full. In this way, you'll avoid paying credit card charges and high interest rates.

Don't be tempted to pay only the minimum amount due for it will later make you pay more. Later on, you'll realize that you are just paying for the interest and credit card charges. Thus, making your debt balloon.

7. Leave Your Credit Cards at Home

Not unless you have high-self control, you should always leave your credit cards at home when you go to malls. In this way, you can resist temptation and you can think twice or thrice before purchasing something.

8. Keep Track of Your Credit Card Purchases

You should keep track of your credit card purchases by having a notebook where you list down all your credit card transactions. This will help you have a check and balance once your credit card statement arrives. Aside from that, it will also create awareness on how much you owe already.

9. Avoid Zero Percent Interest Purchases

Again, there is no such thing as zero percent interest. I suggest that you just save up for something and buy it in cash. Choose delayed gratification over instant gratification! In fact, delayed gratification will give you greater pleasure.

You'll also be amazed if you offer to buy something in cash. They will give you additional discounts which is actually the hidden interest if you use your credit card.

10. Request for Lower Credit Limit

This is weird right? Anyway, this will help you control your spending.

That's all for now. I hope this blog entry helps you. =)

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