Credit cards are a convenient financial tool for many individuals in the Philippines, as they offer ease of use for everyday transactions and access to credit when needed. They can be used for both large purchases and day-to-day expenses, including those for groceries, dining, fuel, and utilities. Additionally, many credit cards offer rewards programs, cashback, and other perks, making them attractive to consumers.
However, if not managed properly, credit cards can lead to financial challenges. Missing payments or carrying high balances can result in excessive fees in the form of late payment charges and high interests, which can accumulate over time. Poor management of credit card debt can also negatively affect your credit standing, making it more difficult to access loans or financial products in the future.
It’s important to avoid these situations so your credit card remains a helpful financial tool rather than a source of stress. Now, let’s discuss some practical habits you can start developing today to keep your credit in good standing.
1. Pay Your Credit Card Bill in Full and On Time
One of the most effective ways to avoid excessive credit card fees is by paying your bill in full and on time. When you only make the minimum payment, interest begins to accumulate on the remaining balance, which can quickly spiral out of control as it compounds over time. Conversely, when you pay the full balance by the due date, it ensures that you avoid interest charges altogether.
To cultivate this habit easier, choose a credit card that lets you pay with ease. In the case of Landers Cashback Everywhere Credit Card by Maya, you can easily pay for your bill through the Maya app. Simply log in to your app and go to “Cards,” where you can select which you’d like to manage or pay for. Then, tap the “Pay” button. From here, you can review or change the amount you pay and complete your payment. Just make sure you have enough funds in your Maya Wallet to complete your payment. You can cash in for free to your Maya Wallet at TouchPay kiosks or through our partner merchants, or online via your linked bank accounts or from other banking apps (via InstaPay or PESONet). Visit this page for more details.
If you’re strapped for cash at the moment, pay at least the minimum amount due. It will help you avoid paying for the late. Then, settle the rest of the amount as soon as you can to reduce interest charges.
2. Be Aware of Potential Fees and Interest Rates
It’s also a good idea to understand the various fees and interest rates associated with your credit card. Many cardholders overlook the fine print, which can lead to unexpected charges. Common fees include late payment fees, balance transfer fees, over-limit fees, and annual fees. Additionally, different transactions might have different interest rates. For example, the interest rate for cash advances is often much higher than for regular purchases.
Having said that, take the time to read the terms and conditions of your credit card and stay updated on any changes in fees or interest rates. This knowledge will help you make informed decisions and avoid unnecessary costs.
3. Manage Your Credit Card Spending
Another positive habit to avoid credit card debt is controlling your spending. It’s easy to swipe your card for impulse buys, but these expenditures can add up pretty quickly. A good practice is to treat your credit card like cash, which is to only charge what you can pay off in full by the end of the month. You can also track your monthly income and expenses to ensure you’re living within your means.
With your Landers Cashback Everywhere Credit Card, you can set up daily spending limits and track your credit card usage in real time. This makes it easier to monitor your financial habits. For instance, you can set a limit for online payments to help you manage your online purchases. You can also limit any foreign transactions, which can be very helpful when keeping track of your spending while your vacationing overseas.
4. Review Your Statement of Account Regularly
It's also essential to review your credit card statement every month. Doing so helps you keep track of your expenses and ensures that no unauthorized charges or errors slip through. Keep in mind that mistakes can happen, like double charges or incorrect billing amounts. However, catching them early gives you time to report the incident to your credit card issuer and prevent overpayment.
Additionally, regularly reviewing your statement allows you to spot any fees that might be accumulating, such as late payment fees or charges for exceeding your credit limit. When you’re proactive in reviewing your statement, it helps you address any issues immediately. This prevents any fees from snowballing into bigger financial problems.
5. Keep Your Credit Utilization Ratio Low
Your credit utilization ratio is a key factor in maintaining a good credit score. This ratio represents the percentage of your credit limit that you’re using. If your credit card has a limit of PHP 100,000 and your balance is PHP 30,000, your credit utilization ratio is 30%.
To keep your credit score healthy, it's usually best to keep your utilization below 30%. High credit usage signals to lenders that you might be relying too much on borrowed money. But when you keep your balance low, you reduce the risk of incurring high interest and fees while boosting your credit standing.
6. Consider Cash Advances Only as a Last Option
While it might seem convenient, using your credit card for cash advances can be costly. Cash advances typically come with high fees and interest rates that start accruing immediately, unlike regular purchases, which may have a grace period.
If you're faced with a financial emergency, consider getting cash advances only as a last resort. Instead, explore alternative options, such as borrowing from family or friends or using a personal loan, which usually has lower interest rates compared to cash advances.
Credit cards can be a powerful financial tool when used responsibly. If you want to avoid excessive credit card fees and maintain good credit standing, cultivate these positive habits starting now. They can help set you up for long-term financial success. Stay disciplined and enjoy the convenience and benefits of credit card use without the stress of excessive fees.
