Secrets of a Debt-Free Cardholder

Credit cards make life convenient but they can also bury you in debt. With credit cards, you get to enjoy cashless transactions, exciting promos, and exclusive rewards whenever you spend. This means that you don’t have to carry cash whenever you travel, you can use them for faster (and safer) online transactions and you can even track your spending conveniently.

But these conveniences come at a cost: being too convenient. That’s right. Because a credit card lets you make payments easier, it could also make you spend more. This slippery slope of mismanagement could turn into a financial rut that can bury you in debt. The secret to not slide-falling this slope? Responsible use.

“Ah, but that’s easier said than done.” You’re right, it is. But exerting effort in being proactive with debt is far easier than crawling your way out of debt quicksand.  Here are seven (not-so-secret) tips to stay away from debt.

1. Pay your balance in full every month

Responsible credit cardholders pay their balances completely each month to avoid interest charges and other fees. Remember this: paying only the minimum amount due means that you’re losing money because your credit issuer will charge interest. And this interest grows the longer you don’t pay your full balance. During times where you just can’t afford to pay off your bill completely, try paying as much as you can, then pay off the rest as soon as possible.

2. Pick a payment day and remember it

Develop the habit of paying your card in full at a certain day of the month. This will lessen the chance of forgetting to pay (trust me, it happens to the best of us). Set it on an important day: your birthday, an anniversary, your sweldo day.

3. Have redundancies

Sign up for mobile or email alerts and have your statement sent straight to your inbox in case your delivery guy sends the physical bill late. Mobile and/or email reminders can also give you an extra layer of account security, especially if your bank sends login notifications, transaction alerts, or notices, helpful when you’re close to reaching your credit limit.

4. Stick to your budget

It can be oh-so-easy to overspend when using credit cards, especially if you don’t track your expenses and stick to a budget. The first step, of course, is to set a budget. Before you think about using your credit card for shopping, consider your monthly fixed costs: transportation cost (if you use GrabPay), utlity bills, subscription costs (Spotify, Netflix, Prime App Subscriptions) and other recurring payments.

After that, list the things you use your card on such as food, clothes and other essentials. Whatever’s left is your buffer for impulsive purchases. Don’t forget your other credit cards, if you have any, in computing your costs. Finally, check how much of your total credit limit you’re using. A good starting point is to not go over 30% utilization of your total credit limit.

5. Know and use your perks

Who doesn’t love discounts? Do yourself a favor and check your credit card issuer’s rewards catalog. You can get discounts on restaurants, purchases, or even airline miles every time you swipe your card. Security Bank’s rewards credit cards have non-expiring rewards points.

6. Use balance transfers

If you’ve already incurred some credit card debt, a balance transfer can help you get rid of it faster with, hopefully, less of a headache. A balance transfer basically means that your new credit card issuer agrees on taking on your existing debt. This will consolidate all your credit card debt into one bank where you can get a lower interest rate. This also has the added benefit of simplifying your debt payments because you’ll only need to pay one bank

All in all, being a responsible credit cardholder boils down to being proactive. If you know that you’re credit card expenses are exceeding your cash flow, act quick and stop the bleeding. It’s common sense, I know, but common sense usually goes out the window when people are in denial. The sooner you come back down to earth, the better your financial situation will be.