By: MJ Gonzales | Executive Chronicles
Back in school, history is an indispensable subject. In terms of your personal finance, it’s also crucial to track your past and be careful with your present expenses. However this is not for budgeting purposes only, but also for your impressive credit history.
“A credit history is an account of how you’ve used your credit over the years that shows your responsibility in repaying your debts. Banks use this history to determine whether you’ll be likely to make payments on time or not,” iMoney’s definition.
With the above explanation, it’s clear that the financial institutions include investigations of their clients’ past and active debts. Thus, it’s good if you settle your credit card bills religiously so you will not have bad credit history. Unless, you have no plan to borrow money from any financial firms like banks.
Remember also that the right amount to pay is always the outstanding balance and not the minimum payment. If you‘re accustomed to pay the minimum, which usually 5% of the total balance, you will see that the interest will start to build up. In the end, you may double or triple the amount you need pay because of the interest. Apart from this, you should also take note of the annual fee. The good news is you can negotiate to waive it, especially if you’re also a good payer. Furthermore, you can also follow strategic steps in paying your credit card loan like availing promos.
“Make use of promotional offers like transfer-all-your-credit-card-balances-to-us-pay-a-lower-interest promo. Moving from an original sky high 18% per month to 5% is worth it. But, take care and examine the offer closely for hidden charges. Always read the fine print,“ Moneymax.ph’ advice.
In connection to “always read the fine print,” Bangko Sentral ng Pilipinas (BSP) shared that there’s no regulation that stops any financial firms to increase their interest rates and charges. They only requires banks and their subsidiary credit card issuers to be transparent about their conditions with their cardholders.
You may not be imprisoned due to debt, but bad credit history may affect in different ways. If some people find cushion in achieving their dream car, house, and business through bank loans. Those with negative background have to resort to other means like paying in cash.