Responsible ways to maximize your credit card benefits

A credit card is a useful financial tool. A credit card provides the convenience of being able to make purchases without the burden of carrying physical cash.

A credit card also allows you to buy more high-ticket items more easily. Credit cards also offer perks and rewards when making purchases, which can be redeemed for other types of products and services.

Owning a credit card also boosts your credit score, which affects how willing banks or other financial institutions are to lend you money.

However, improper use of your credit card can lead to expensive monthly payments and accumulated interest, which means paying more the longer you hold back in paying them in full.

To avoid this from happening to you, here are some practical tips you should always follow.

1. Pay off your balance every month. As much as possible, pay off your monthly credit card bill on time and in full. You can avoid paying interest on your credit card purchases by strictly following your budget. Don’t spend more than you can pay for any given month.
2. Avail of payment offers to manage your cash flow. Credit cards are useful when your current income or savings cannot cover a big-ticket purchase. For example, you can opt to pay in installments for a nice personal laptop that you can use for side-hustle. Installments let you pay in smaller amounts over an agreed time, thereby allowing you to manage your budget.
3. Maximize your reward points. Most credit cards in the Philippines accumulate reward points that you can use in select merchants and stores. Whenever you can, use your points, especially if that means a discount on essentials, like groceries or gas.

A good tip to follow when using your credit card is to stay under 30% of your total credit limit. For example, if your limit is PHP 100,000, you should keep your balance under PHP 30,000. This way, you will have an easier time planning your monthly budget.