(Editor's note: This article was written by MoneyMax, the Philippines’ foremost online platform for comparing financial and telecom products and services, for ABS-CBNnews.com. Find out more at MoneyMax.ph.)
MANILA, Philippines - In the Philippines, 15 percent of credit card users are reported to be delinquent. Credit card delinquency is caused by constant credit card malpractice and financial negligence.
Credit cards are a good financial gear, but using it irresponsibly can give you one of the worst financial nightmares.
As early as you can, try to adjust your erroneous credit card habits:
1. Late and missing payments
Late and missed payments are the start of being in debt. If you missed a payment, your remaining balance will incur an interest. That means, you have to pay for something you did not really consume.
2. Maxing out credit limit
Remember that your credit card is a loan. Don’t spend for something you think you won’t be able to pay later on or simply, something you cannot afford. You were given a limit that is based on what your bank thinks you can afford every month so don’t max it out or spend way beyond your limit.
3. Unwise balance transfers
The idea of balance transfer is useful when you really want to get out of debt by religiously paying the monthly charge. Otherwise, you will get into much financial trouble because of compounding interest. Much more if you didn’t read the fine print of balance transfer fees.
4. Cash advances
Use these feature only on extreme emergency cases. Even the banks appeal to refrain cash advances because of the higher monthly interest.
5. Using a lot of credit cards
Why do you even need to have more when you already have one? It just means more debt anyway – more debt, more interest, more effort on financial management.
6. Spending for rewards
There are several rewards and promos in the market everywhere, but it’s not good to spend just to get rewarded. For instance, paying your car insurance monthly premiums through your credit card is not a wise move, because you pay something from a loan. Buying something to avail the rewards is not a good financial move – costly even.