These days, cashback credit cards offer a smarter way to pay for daily essentials and big-ticket purchases. For instance, Maya’s exclusive Landers Cashback Everywhere Credit Card offers up to 5% cashback at Landers, 2% on dining, and 1% on all other qualified transactions.* Cardholders also enjoy an annual cashback cap of PHP 200,000, making the card a better way for qualified Landers members to shop than just cash alone.
However, to make the best use of a credit card’s rewards and features, you must be aware of how credit card interest rates work to make sure that interest payments don’t negate the rewards you get. Interest rates are fees applied to any unpaid amounts remaining after the due date on your statement, usually expressed as “finance charges” or “finance fees.” These fees and their conditions can vary from card to card.
For the Maya Bank credit card, a 3% monthly interest rate is applied to unpaid amounts on regular credit transactions. For cash advances, a 3% monthly interest rate is computed from the date when the cash advance was withdrawn. This makes the Landers Cashback Everywhere Credit Card rates among the most competitive in the market, considering that it also comes with no annual fees at the moment.
Before a Maya credit card payment fee appears on your statement, it’s good to know how credit card finance fees work and how they contribute to the wider availability of credit. Let’s dive in on some key points related to credit card interest rates:
How Interest Rates Work
1. Interest Guarantees the Availability of Easy Credit
Credit card interest rates are necessary because lenders must take on risks when they provide credit to people without asking about the purpose of the loan or requiring immediate repayment. The rates are meant to compensate for potential losses and administrative costs, ensuring that providers can continue offering easy credit to their customers.
2. Grace Period
To make accessing credit a less stressful experience, credit card providers offer a grace period, which covers the days between the date your credit card bill is generated and the due date of that bill—a period that lasts for about 3 weeks, on average. During this time, no interest accrues on regular credit card purchases, so long as you pay your balance in full. Grace periods generally do not apply to cash advances and can be revoked as a benefit if you’ve missed payments or carry a balance from the previous month.
3. Minimum Payments
Most credit card issuers require a minimum payment each month, often a small percentage of your balance plus interest and fees. Technically, paying only the minimum will keep your account in good standing. In practice, however, it allows interest to accumulate on the remaining balance, increasing the cost of borrowing through compounding interest and prolonging your payment periods. Generally speaking, you should always aim to pay the full amount or, at least, a lot more than the minimum.
4. Variable vs. Fixed Rates
Credit card rates can either be variable or fixed. Fixed rates remain constant while variable rates can be tied to the amount borrowed, external factors, or whatever benchmarks the provider requires. To simplify your finances, Maya’s Landers Cashback Everywhere Credit Card has a fixed 3% monthly interest rate.
5. Overlimit and Late Payment Fees
If you miss payments or exceed your credit limit, late payment or overlimit penalties may be applied. For the Landers Cashback Everywhere Credit Card, late fees amount to PHP 1,000 or the unpaid minimum amount due, whichever is lower. Overlimit fees are charged at PHP 750 per occurrence.
How You Can Minimize Charges
Make it a Habit to Pay Balances in Full
While credit cards do give you buying power beyond your income and savings, it’s best to understand them as a convenience that comes with a few caveats. Only use them for purchases that you can pay off comfortably by the due date so that your borrowing costs remain minimal. If you have a rewards credit card, paying in full will also help you get the most out of your spending and the rewards you receive.
Monitor Your Spending with The Maya App
The Maya App offers convenient monitoring so that you can easily stay within your budget. Make it a habit to check it frequently to keep tabs on your credit card spending.
Understand Your Credit Card’s Rates and Fees
Familiarize yourself with your card’s fees, particularly for unpaid balances and cash advances. Being fully aware of these helps you prioritize payments and reduces your overall costs.
Only Use Cash Advances When Necessary
Cash advances are a useful financial tool, but you should only reserve them for real emergencies. They lack grace periods and their interest is typically calculated upon withdrawal. Cash advances also rarely qualify for rewards, and their fee and payment structures can easily wipe out the value of any accumulated cashback points. If possible, stick with regular card purchases to fully maximize your perks as a cardholder.
Master Credit Card Interest for True Financial Freedom
Understanding how credit card interest rates work lets you enjoy worry-free credit and helps you avoid the associated downsides. With the Landers Cashback Everywhere Credit Card’s consumer-focused terms and generous rates, becoming a disciplined credit user is easier than ever. Apply for a Landers membership to get on the path to quality credit. If you’re already a Landers member, download the Maya App and get an upgraded Maya account to get started.
*Transactions that don’t qualify include: cash in, cash advance, quasi cash purchases, casinos and gambling, fuel, supermarket, pharmaceuticals, utilities, telco, and government.
