How should we use a credit card? Great question, huh?

I just had my card for almost two months now and I think it’s still a question that I have. But before I actually applied for a credit card. I’ve already read so many things about it and what I have to share are some things they have said in common and my own experiences.

So let us go first with why do you need this credit card?

Of course, there are things that you wanna buy as soon as you have seen them. You may wanna buy an item on an installment basis or you want some access to something that requires a credit card (yeah there are some like PayPal).

Those are my actual reasons why I want a credit card.   Once you have your reason for it you should just use it for that reason. Don’t go beyond that.  

Let us talk about installments.

I got confused with that for real! I realized that it doesn’t really make sense unless you have a bunch of credit limits. I’m not sure if everyone had the same misconception as I do, but I’ll explain why: So I work in an advertising company. The customers we have can advertise for a year on an installment basis.  

The installment basis that we have worked like this:

The charge is the lump sum. It’ll be credited back and be billed as monthly installments.  

I thought credit card works that way too. Since I only applied for a trial secured credit card with a 9000 PHP worth of limit, I thought installments are really nice.  

I tried spending 5000 PHP and requested to have it billed as 3 monthly installments.   That was 0% interest so I just grabbed it. I thought that 5000 will be credited back and will just eat my credit limit with the monthly fee. But I definitely got it wrong.   5000 was fully deducted out of my limit but it will be billed as installment. Therefore, for the next 3 mos, I will only have a 4000 credit limit.  

That was so stupid of me, I guess. But at least I found out how it really works.  

If you have a small credit limit and if you think you can pay it in a month anyway just charge it in full than installment.

Get away from paying annual fees!

How?   Usually, your card offers rewards.  

With my card, each 35 PHP I spend it earns 1 point and 8000 points can have my next annual fee be waived.  

That is almost 280,000 PHP worth of spending. That is hard if you are not a hardcore shopper and if your limit is very limited as mine. But don’t lose hope!  

If there’s a wheel, there’s away.

So what you can do about it is to use your card for daily spending.  

Got a night out with friends and it’s a chip in?  

Ask them to pay you for their contributions and use them for paying your card by the next day. I usually do that.  

I even charge 200 PHP worth of something to my card and pay it the next day just to earn a point.   Silly in a smart way. Hahaha! You can also use it for business.

Let a friend (a trusted one) ride with your limit and let them pay a week before due add some interest but not too much(remember it’s your friend).   There you’ll earn some money too.  

Usually, they follow billing cycles. It’s better to spend one day after your bill cut off and pay every salary day.   

Let me share my way.

My bill cuts off and the bill date is every 7th and my due date is every 27th.

My salary arrives every 10th and 25th.

If I spend using my card on May 8, my bill will arrive on June 7.

Therefore, my due date for that will be June 27. What I’ll do is to pay it every salary day. Which is May 10, May 25, June 10 and June 25? Best practice right?    

There are so many charges and fees if you don’t use your credit card properly.

Make sure to avoid that! There are lots of it so let me just give you some idea what to avoid.  

  • Don’t go beyond your limit. There are over-limit fees you know! They may set you a limit, but for the creditor to have a chance to charge you with this. They may allow you to over-limit your credit. I experienced it before and had to pay 300 PHP extra out of my bill that is an equivalent of 2 value meals at McDonald’s.
  • Always! Always pay before its due. Don’t just pay the minimum payment because aside from finance charges there are also extra fees that are being calculated annually because of overdue invoices.
  • Don’t do a balance transfer if not necessary. They don’t have interests, but transaction/processing fees may apply.
  • NEVER EVER GET A CASH ADVANCE! Man! This has high interest. It can be a percentage or a fixed amount of interest usually they say “WHICHEVER IS HIGHER”. As far as I know, this one doesn’t have any grace period.
  • Never use your credit card on Gambling spends… It occurs very high interest.
  • As much as possible, don’t do installments. Just try the one I mentioned earlier. A perfect straight purchase on a perfect timing is just like a short-term installment. Aim for that instead of real installments. Even you see 0% interest you’ll find out that the price is higher when on installment than the ones on straight cash.

Installments on Department Stores are the best

Although I do not encourage installments, installments in department stores are fine.., Usually they offer a buy-now-pay-later promo around ber months and 0% interest installments for 3 to 6 months.

In my experience, you just have to make a minimum of 5000 PHP worth of Dep Store items to avail it in installments.

Unlike other types of installments, you’ll notice that the price increase when it is in credit card installments even it is tagged a 0% interest. On the other hand, the Department Store price doesn’t increase even you split it to installment as long as the 0% interest is available.

Right now those are the things I think most essential to know. But you must read your terms and condition because there are a lot of things to pay if you don’t make yourself aware of those things.  

If you have something to add feel free to comment down below. I’ll be glad to see them in the comments section.

I want to share as well the site I usually go to when getting advises like these. It’s most applicable for us who are in the Philippines:

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