For Expats and OFWs: How to Use Your Credit Card Wisely

Credit, in the form of a credit card is something many people want and use on a regular basis. Yes, it can be dangerous, but much like physical cash, it can be conveniently used for making purchases, with the additional convenience of select benefits such as earning miles and points.

A credit card is also a lot like your health. For it to work for you, you need to take the appropriate care so you don’t fall victim to the pitfalls of unhealthy side effects. Our tip: Minimize the risk by watching out for the signs and making responsible decisions.

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Guide to Using Your Credit Card

Here are some tips to remember that will keep you safe and help you avoid getting caught in the debt trap when using your credit card:

1. Fully pay your monthly credit balance.

If you are the rare super responsible type who promptly pays all of your bills 100 percent of the time, then you are safe. Otherwise, you would want to start taking a good look at your payment records to ensure that you will not have troubles getting a loan later in life when you actually need one.

2. Prioritize your credit card payments.

A lot of credit card owners tend to misuse their cards and forget about watching their spending habits. As a responsible card owner, keeping a healthy credit means making monthly payments a priority. Otherwise, your life story will be one filled with late penalty charge and interest.

3. Check the reward system offered by your credit card.

Most people use credit cards for different purposes: to earn cash back or travel rewards, get discounts or rebates, or special access to certain events. Whatever your reason, it won’t hurt to know what kinds of perks are offered by your card by checking on the website of your credit card provider. After all, if you can manage your credit card correctly, it may actually earn you hundreds of dollars a year just for using them for everyday purchases.

4. Only use up to two credit cards.

The recommended number is two credit cards for an individual. Going beyond is all up to the user, but more often than not, brings more trouble than gain.  Credit card ownership comes with certain consequences and having to deal with more than two of them? Pure headache.

5. Don’t treat your credit card like an emergency fund.

One myth that people still believe in nowadays is that credit cards are good for emergencies. Truth is, it’s not smart to cash in from your credit to pay unexpected expenses as this will only make debts higher and harder to pay off.

6. Check your credit statements

Checking your card statements is also an important habit. Whether you’re receiving text messages or email messages, tracking your bills and payments will make sure your details are protected.

7. Set a credit limit before actually spending and stick to it.

The recommended consumption from your credit line is at most 25 percent because whatever you owe on the card at the end of the month—even if you pay it off in full—is divided by your available credit limit to get a “utilization ratio.”

8. Know how much you can afford to pay back and never max out your card.

Remember, it’s still money you don’t own and owe to your bank.

The tips above are just some helpful guidelines on how to use your credit card. All in all, it is still about practicing self-control and how you are able to financially control your expenses to make the credit card system work for you instead of the other way around. We hope you find these small tips helpful.

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