Savvy spending: How to best use a credit card
MANILA, Philippines — Being a responsible credit card holder means more than just dispelling the urge to swipe that card. A lot of Filipinos have this misconception that credit cards will only lead to unnecessary expenditures, what with the heady allure of instant gratification. So more often than not, most people think that cash is still king. After all, it prevents you from spending more than what you make, and there’s no added interest involved.
However, a savvy spender would know that while the risks involved in using cold hard cash is minimal, so are the opportunities.
Nannette Regala, BDO Senior Vice President and Consumer Lending Group Marketing Head, says “Cash is still the most popular standard…when you use cash, you don’t get an extra benefit, but when you use a credit card, you get all the perks that come with it.”
When you are in need of immediate funds, your credit card is easily the most convenient source of payment. When you go online shopping, you will likely need a credit card to shop at more reliable websites. Not everyone has the time to hunt for an ATM with every single purchase, or seek online vendors who accept cash upon delivery or bank deposit payments. These are just some of the conveniences that credit cards allow us.
Not just that, with the number of credit cards available in the market, there’s an equally vast number of unique benefits tied to each one. And if you are responsible and disciplined enough to wield the powerful plastic, you might actually save on cash or spend less than you normally would in any given month.
Here are some tips on how to be a responsible credit card user.
Choose your credit card wisely
With every credit card comes a unique set of features. Perks could be anything from redeemable points to hefty discounts. The newest in the Philippine market is the American Express Cashback Credit Card launched last June 23 at the New World Hotel in Makati City.
This particular credit card offers instant savings in the form of cash rebate. All local purchases made with the American Express Cashback Credit Card incur 1% rebate, and all international purchases incur 2% rebate. There is no minimum purchase necessary, and no cap as to how much rebate you can accumulate — just maximum savings.
Make a list of expenses
True or false: Are you the type who withdraws a sizeable amount of cash all at once, then declares that the limit of what you’ll be spending? Well guess what, you’re not being a savvy spender at all.
While it might seem like you’re doing your best to live within your means, your expenses are more often than not, improperly allotted or unaccounted for. To properly use your credit card — or your funds, in general — make a list of everything you need to spend for every month. Prioritize and calculate what you need, then include a buffer and more importantly, set aside savings.
But don’t be too stringent. Allow yourself some leeway for special gifts and purchases. The better you plan, the more prepared you’ll be to conquer that monthly billing statement.
If you are consistently responsible with your credit card, you can improve your credit score. Higher credit scores can allow you additional perks like easier approval for home or auto loans that can really be beneficial down the road. Plus, this will help build an impressionable credit history.
Use your credit card for purchases you regularly make
Gas, groceries, electricity or broadband - for a lot of homes, these are monthly budget mandatories. If you set aside a portion of your income for this, and it’s something you would pay in full in cash anyway, then it would be smart to use your credit card instead to avail of the added benefits. And using something like the American Express Cashback credit card will allow you that 1% rebate, which in the long run, piles up. — Rappler.com
American Express® Cashback Credit Card is the newest credit card offering in the Philippine market, exclusively distributed by BDO. Cardmembers can enjoy 1% rebate on every local purchase, and 2% rebate on every overseas purchase. This applies to sale or discounted items, with no minimum purchase and NO MAXIMUM REBATE CAP. As a special introductory offer, Cardmembers can avail of up to 5% cashback on every purchase until September 30, 2015 and a complimentary P500 cash credit for online applications until December 31, 2015. Click here to apply.