Signs you are financially ready for a credit card

Credit cards in the Philippines can provide many benefits, but only if you use them wisely. If you believe you fit the bill, then it’s time to apply for a credit card so you can unlock its benefits.

Like savings accounts and debit cards, credit cards are one of the more common bank services Filipinos opt for. There are many benefits to owning a credit card: from reward points, to the convenience it provides many Filipinos and their families. When used responsibly, a credit card can offer valuable benefits, like convenient payments, rewards, and building a positive credit history.

But how do you know if you are ready to have a credit card? Here are some factors that can help you determine if you’re ready to own your first credit card.

Signs you are ready for a credit card

Understand how credit cards work

You know you’re ready for a credit card when you understand how it works. To understand its basic mechanics, let’s look at the difference between a debit card and a credit card.

When you make a purchase with a debit card, you’re paying for it with money inside your savings or checking account. This means there is no remaining liability on your part, because you’ve paid for the item. Basically, it’s like invisible cash.

When you pay for an item with a credit card, the bank offers you a line of credit, settles your purchase to the seller and requires you to pay this loaned amount in the future. To the seller, your purchase is as good as paid. It’s the bank that you now owe money to. Again, it’s like invisible cash, but you have to pay it back later.

Paying off your credit card bill on time and in full every month is a sign that you have good money habits and that you understand how credit cards work. It’s more than understanding the basics, it’s also understanding how it can help improve the way you manage your money.

Paying off your credit card bill on time and in full every month allows you to manage your debt, so you won’t have to worry about interest rates, late fees, card fees,, and other caveats that come with paying off your bill. Repaying the money that you’ve already spent on a purchase in full and on-time means you won’t be surprised when your credit card statement comes in, because you were expecting it.

You have a stable source of income

Many banks do not issue credit cards to those who have no stable source of income and for those employed for short-term projects. The reason: it’s to protect you from falling into debt. So, if you have a a steady income, you’re most likely capable of owning a credit card.

Having a steady source of income ensures that you do not depend on your credit card to make day-to-day purchases. Without a job, these purchases can accumulate and gain interest whenever you miss your monthly payments, making it difficult to pay off your credit card bill. A stable job empowers you to use your credit card and provides you with the capability to make the monthly payments.

You should only get a credit card when you've held a job for at least six months. This demonstrates a stable income source and increases your chances of approval.

You have savings set aside

A sign of being financially responsible is that you have a savings account and an emergency fund set aside. You are not the type who lives paycheck-to-paycheck, which means you are responsible enough to prepare for the future. Both of these show that you know how to handle money wisely and responsibly. They also show that you know how to deal with money by budgeting the money you have, and the value of saving for a rainy day.

Having a savings account also means you are ready to have a credit card. In the unfortunate event that you end up spending more than you planned, use your savings to pay the difference, rather than skip on your credit card payments.

Know what purchases to prioritize

When you’re the type who considers the cost and value of an item, you’re less likely to be tempted to go on shopping sprees you can’t afford.

You know how to spend money wisely and rarely do you go over budget when giving into your wants every now and then. Having this sense of financial and budget discipline may also be a good sign that you’reg ready for a credit card.

If your situation requires a tighter hold on your money, consider using cash or applying for a debit card instead. This way, you can monitor and control your spending. With debit cards, you can’t spend money that isn’t already in your bank account.

You are organized and mindful of deadlines

Another sign of credit card readiness is your organizational skills. You need to be able to track your purchases and be mindful of your payment deadlines. This means keeping your receipts, reviewing your credit card statements regularly, and setting reminders for your due dates. By staying organized, you can avoid late payments and interest charges, which can impact your credit score.

Being organized can also help you maximize your credit card rewards. If you keep track of your spending and know which categories earn the most points or miles, you can use your card to earn more rewards.

Should I get a credit card?

So, do you think you are financially ready for a credit card? Which of the factors discussed will you need to work on, if any? Owning a credit card allows you to enjoy privileges and special perks tailored to your lifestyle. By using credit cards wisely, you can make room for more memorable moments in your life!

At Metrobank, credit cards come with top-of-the-line convenience and benefits, such as Cash2Go (converting unused credit limit to cash), Bills2Pay (letting your credit card handle your monthly utility bills payment), ON Virtual Mastercard (a virtual companion to your Metrobank credit card), and more.