“Should You Get a Credit Card or Not?” This should have been the first question that I should have asked myself before I got my first card a few years back. Asking myself this question could have saved me from a financial mistake that cost me stress and money. Luckily, that’s all in the past now and I’ve learned my lesson well.
I only got a credit card when I moved to my 3rd job when a colleague of mine suggested that I should get one. I never bothered myself in asking if I should or if I should not get a credit card. I just did. I did without doing my due diligence and without researching it.
And just like most horror stories that you’ve probably heard about credit cards, I also ended up in debt. Luckily, it was not really that much and I was able to pay it in a year.
This happened to me more than a decade ago and looking back, I should have made my own research and I should have kept myself informed on how to properly use a credit card. Looking back, the problem was not really having a credit card. The problem was the lack of financial knowledge that could help me utilize a valuable financial tool to my advantage.
I learned a valuable lesson after that slightly horrible situation that I got myself to. And from then on, I was able to utilize my credit cards to work for me and not against me.
If you are thinking of getting a credit card, ask yourself first, should you get one or not?
Reasons Not to Get a Credit Card
You Have a Lot of Unpaid Debts
If you have a lot of unpaid debts to your family, friends, colleagues, lending companies and banks, etc, then don’t get one yet. Not having a credit card while you’re paying off all of your existing debts will teach you a valuable lesson about money and how to live within your means. It would be best if you clear all of your debts first before you apply for a credit card.
You Are an Impulse Buyer
Getting a credit card if you’re an impulse buyer is not a good idea. Shopping malls around almost all business districts in Metro Manila and the temptation to splurge are everywhere. Online shopping in the Philippines is also becoming a big thing and if you can’t control your urges to shop then you might end up in debt if you have a credit card.
You Don’t Have a Stable Job
If you find yourself job-hopping probably because you’re still finding your place in the corporate world, then I suggest not to get a credit card first. Not having a stable job might cause you to get into debt primarily because you don’t have a fixed monthly income. It would be very difficult to pay for your monthly card dues if you don’t steadily receive a monthly paycheck.
Related Post: 10 Things to Do When You Lose Your Job
You Are Not Yet Adept in Managing Your Finance
If you are not yet adept in managing your personal finance then I also suggest not getting a credit card yet. Getting one when you are not yet good at managing your money might end you up in debt. If you don’t have a budget and if you easily lose track of your expenses, even small card charges will pile up quickly. I suggest that you teach yourself first how to follow a budget and also how to track your expenses. Once you have mastered following your budget then I think you won’t have any problems managing your credit card/s.
You Don’t Know How to Say ‘NO’
Most of us are generous people and we often say ‘Yes’ to every requests that we get from our family and friends even if sometimes those requests will incur us debts. We often treat our parents, siblings, relatives, and friends and even work colleagues to restaurants during their birthdays and other special occasions. We always tell ourselves that it’s just money and relationships are important.
In some of my previous work, I also had requests from colleagues that are closed to me to swipe some of their purchases. Some long time friends also asked me in the past to swipe their grocery expenses and even their fuel expenses when they have no money. I’ve always said ‘Yes’. And I think I’m very lucky because they have paid me in all of those credit card purchases.
But not everyone I know got lucky though. I know some people who got in debt because some of their so-called friends did not pay the credit card charges that they owed. A close friend of mine swiped for the hospital bill of his uncle because of the request of his aunties and uncles. They said that they’re going to split the bill. They never did. He was forced to work abroad just to be able to pay for those card charges.
These situations are sadly becoming more common than you think. So before you say ‘Yes’ to anyone asking you for this favor, think twice, thrice, or even more.
Reasons To Get a Credit Card
You Have a Strong Financial Awareness
If you are well-aware of where you are right now financially and where you want to take yourself, then there’s a high chance that you’re a goal-driven individual. If your financial goals are clear and you are motivated to achieve it, then getting a credit card will not be a disadvantage for you but rather, an advantage,
Most people don’t recognize that a credit card is just a tool. A tool that can make or break an individual depending on how it’s used.
You Have a Strong Sense of Discipline
Some people are highly self-managed and require very minimal supervision by anyone even at a young age. I really admire these people who have dodged countless bullets just because of their strong self-control and discipline.
If you are one of these people then getting credit will not cause you any problems. You know when and how to properly use it.
You Frequently Travel
If you frequently travel locally or internationally then you will benefit a lot from having a credit card. It will even help you save some money because a lot of travel credit cards in the Philippines offer access to airport lounges (free and for a fee), free travel insurance, and miles accrual.
As long as you are in control of your shopping urges and as long as you’re not an impulse buyer, you will not have any problems with owning one. It will even be a great advantage to you when you travel abroad.
You Want to Build Credit
Unlike the US, there is still no centralized credit reporting in the Philippines wherein you’ll get a score (numerical value). But even without that information, banks and lending companies, still, look at your credit information before they approve your loan or even your credit card applications.
If you want to build your credit score, owning a credit card is one of the ways to do it. When you use your credit card and if you always pay it on time then potential lenders will know that you can manage to pay your financial obligations.
You Know How to Use it to Your Advantage
There are so many advantages of having a credit card and one blog post is not enough to cover all of it. Agin, a credit card is just a tool. As a tool, you can use it any way you want. You can use it to put yourself in a pile of debt or you can use it to your advantage.
There are tons of benefits and I’m going to list some that I really use to my advantage:
Credit Card Float
Credit card float is the number of days from your cut-off period up to your due date. It varies per credit card so be sure to check with your credit card provided. What I do is I usually use my cards ONLY at the beginning of the cut-off date. In essence, it gives me more around 54 days to hold on to my cash. And also, I ONLY swipe purchases that I know that I can pay in full when the due date comes.
My cut-off with one of my credit cards is every 30th of the month. Let’s say I bought something last June 1 for P1,000. That charge will reflect on my June 30 cut-off period and my due date for that will be on July 25. I gained 54 days to hold on to my cash which is important to me since I use my cash as my revolving capital for my full-time hustle.
Miles, Rewards Points, Cash Backs, Discounts, and Freebies
Anyone who owns a credit card in the Philippines and in almost anywhere in the world knows that you get access to tons of discounts of freebies because of your credit cards. I’ve taken myself and my family and friends to various hotels that had a 50% promotion on their buffet lunches and dinners because of my credit cards. I was able to avail of various discounts with their partner merchants as well.
Another benefit of owning a credit card that I love the most is miles accrual. I’ve earned thousands of miles in the past that I was able to redeem for a free flight ticket (you have to pay for the processing fees and taxes though). I’ve gotten free flights with ought getting into debt. I just used it on my day to day purchases and paid everything in full every month.
Some credit cards even offer cash backs. Cash back means you’ll earn back a small percentage from your purchases and you can use it in a variety of ways (depending on what the bank allows – see Terms and Conditions). The best cashback credit cards in the Philippines often generous rebates on essential purchases which could help you and your family save some money.
It Can Be Practically Free to Own a Credit Card
Owning a credit card means that you have to pay the annual membership fee to avail of their service. However, due to the increasing competition in the credit card market, banks have been offering every now and then credit cards with free annual fee for life. Bear in mind though that this feature is subject to change depending on the bank’s discretion.
I got one of my cards under this promotion and I’m so happy that I don’t have to pay for an annual fee for this card. If you didn’t get your credit card with free annual fee for life promotion, you can have the annual fee waived in a couple of ways:
- Call the customer service hotline and request for the waiver of the annual fee
- Meet the spend requirement that entitles you to an annual fee waiver
I’m sorry for repeating this again but I feel that it’s an important message for this blog post. A credit card is a tool that can help or break you depending on how you use it. Use it wisely and you’ll reap its amazing benefits. Use it poorly and you’ll end up in a huge debt. Educating yourself with personal finance and instilling a strong sense of discipline could help you manage powerful financial tools such as credit cards.
Do you own a credit card? How’s it been since you got your card? I would love to hear your tips and recommendations on how you use your credit card to your advantage.