Swiping the right way: Using your credit card responsibly

Credit cards can be extremely alluring or intimidating. Some see them as free money to spend on whatever catches their eye, while others worry about getting trapped in debt. The truth is, credit cards are neither. When used the right way, credit cards are a practical financial tool that can help add structure to your spending and maybe even some cool perks along the way.

Here are a few pointers on how to use your credit card while staying in control:

Treat it like cash.

The most responsible way to use a credit card is to treat it like cash: don’t spend what you don’t have in the bank. This way, you’ll avoid falling behind on payments and racking up interest.

Always pay your balance in full. 

It can be tempting to make only the minimum payment when your credit card bill comes, especially since it’s usually a small percentage of your balance. But what you may not realize is that the longer you leave the bulk of your balance unpaid, the more you’ll have to pay on your next bill.

Automate your payments.

If you have multiple credit cards, chances are they all have different due dates. And when you factor in your other household bills, these dates can get confusing. The easiest way to get around this is to automate your payments, which you can do right on the BPI app. This way, you won’t mistakenly miss a due date.

Set a personal spending limit.

While your credit card already has its own limit, it’s a good idea to set one for yourself. Using only about 30% of your limit is best for your credit history, and even lower if you’re planning to apply for loans.

This is also useful for budgeting, especially if you have multiple credit cards. For example, dedicate one card for monthly subscriptions, and another for groceries and other regular expenses. This way, it’s easier to keep track of your spending and payments.

Keep track of your purchases.

As with all spending, it’s useful (and responsible) to keep track of your purchases. But paying close attention and taking note of all your credit card purchases not only helps avoid bill shock, but also unauthorized charges. Pro tip: You can keep track of your credit card charges right on the BPI app!

Maximize your rewards.

One of the many benefits of using a credit card is the perks that come with it. When choosing a credit card, make sure that the perks suit your lifestyle and/or goals: take note which ones offer a cashback scheme for groceries and gas, for example, or which ones offer points that can be converted to airline miles. 

Using a credit card can be a smart move for managing your finances and building better habits. If you use it wisely, there’s no need to be intimidated. In fact, you’ll even be rewarded for it.

Want more financial tips and tricks? Click here for more articles like this one from The Program by NEXT..