If you’ve recently applied for a credit card in the Philippines, you may have noticed that the initial joys of being a card owner also come with growing pains. Yes, you now have the convenience of making cashless transactions almost anywhere, hefty price tags don’t make you sweat, and your card may come with a swell rewards program—but you’re also likely worrying about attached fees, credit card statements, and your credit history. At some point, owning a credit card may feel like a double-edged sword, instead of a financial tool that you can use to your benefit.
But in truth, credit card fees don’t have to come with so much grief. One of the ways you can avoid credit card debt is to be conscientious about your payment terms. With a little foresight and a lot of financial discipline, you can wield your credit card as an asset and not as a debt trap. To that end, here is a feature with tips on paying your credit card, discerning between payment options, and making the best out of your credit payments!
Paying Credit Card Bills in the Philippines: What Options Do You Have?
Banks typically offer more than one payment option to customers in their credit card programs, and this is a good thing for the most part. That means that credit owners have leeway in terms of what they’ll pay, when they’ll pay, and how they’ll pay off their outstanding credit. Assuming such flexible terms, there are three possibilities for paying off a credit card—one that is completely undesirable, and two others that have their respective pros and cons.
Let’s start with the first possibility: skipping payments or paying late. Though there is a chance that this could happen to anyone, this option is one that you’ll want to avoid. For every late payment that you make on your credit card bill, not only will you be slapped with a corresponding late fee, but you might also come off as irresponsible to your bank and deal a little damage to your credit history.
The second possibility is paying the minimum, which is typically a rate between 3% and 10% of the total amount due for the month. In the short term, it may be easier on your budget to pay the minimum per month. But you must know that every time you carry over a balance to the succeeding month, you’ll have to pay mounting interest and additional finance charges of 2% to 3.54% for the overdue amount. This will be the case until your credit card balance is fully paid.
The third and best possibility is paying the full amount every month, either early or on time. At first, it might feel like you’re paying a heftier sum, you’ll be avoiding interest and incurring a sweet 0% of additional finance charges by doing so. This possibility also eliminates debt, which is very ideal for a credit card owner.
Additional Benefits to Paying Your Bill in Full and on Time
There are also long-term benefits to be had from consistently paying your credit card bills in full and on time. One is that you’ll improve your credit score as a borrower. If your credit payments reflect your trustworthiness with borrowed money, then you’ll have broader financial prospects. It may be easier for you to get another line of credit approved, to secure a business or personal loan, or to get accepted for a travel visa.
Another benefit is that you will acquire the discipline necessary for financial freedom. Being good with your credit payments will jumpstart other helpful habits, such as learning how to save money. And last but not least, having payment terms like these will lessen your anxiety as a credit card owner—affording you with peace of mind and a sense of mastery over your finances.
To new and old credit card owners alike: best of luck avoiding debt and achieving financial freedom instead.