Wednesday, October 10, 2012

Life Lessons: Credit Card Dos and Don't


I always believed that I was a person who knew how to use credit cards correctly, and so when I was earning enough money, I applied for one.  Well, I was so wrong.  By 2010, I had incurred enough credit card debt that would have enabled me to buy a new car.  But that is getting ahead of my story. Before I begin telling my credit card saga, I would like to make mention of Diner's Card Corporation, the very first company that gave me my very first credit card in 1988. Many years later, I would realize that among my many other credit cards (I had 6), it was the most friendly and had great customer support.  When it was time to close down all my accounts, Diner's gave me the fastest response and facilitated an installment process that was painless and stress-free. All the others get a double, no make that triple thumbs down from me. And so, here are the hard lessons I learned regarding credit card use. Hopefully these will inform and warn potential card holders before they fall into the credit card trap.

Before You Apply/Accept
  1. Check out it's customer support services.  Most credit card companies do not have offices/staff in your areas or local banks.  When you need assistance or clarifications, the only access to them is either through phone or email. This can be very stressful when you need immediate answers or support.
  2. Read the contract and it's fine print. Ask questions and clarify vague provisions. Check out all fees and what they are for.
  3. Make sure that you know enough and understand the use of a credit card before applying (or accepting a pre-approved card) and using one.
Credit Card Don'ts
  1. Do not use your card to make ordinary purchases. Pay in cash for essential goods like food and gasoline.
  2. Do not use your credit card to buy things that you will not be able to pay in full when the bill comes. Sometimes we may not have the cash with us when we need to buy things like medicine or groceries, or we have the cash but need it for something else.  If so, make sure that spending is within budget and cash will be available when it is time to pay.
  3. Do not get into the habit of paying only the minimum amount due.  This will lead to higher amounts of interest on the balance creating a bigger and unmanageable credit card debt.
  4. Don't leave your credit card lying around and always get it after every purchase. Check your purchases and make sure that the amount stated is correct, before you sign the receipt or invoice.
  5. Don't buy things just because you want them.  Always ask yourself if you need that something. Most of the time, you really don't.
  6. Do not make cash advances on your credit card.
  7. Do not purchase services like insurances or card protection.
Credit Card Dos
  1. Have only one credit card for emergencies.
  2. Be responsible. Stay within 30% of your credit limit.  For example, if your credit limit is Php10,000.00, use only up to Php3,000.00 for that billing period.  In this way, you can control your spending and manage payment better.
  3. Keep your credit card at home when you go shopping.  This will prevent unplanned purchases that can only lead to credit card debt.
  4. Check your bank statements every month. If there is anything that does not look right, immediately call or email the number provided in the billing statement.
  5. DO PAY IN FULL and ON TIME. This is to avoid finance charges and interests which will only add to your balance and lead to debt.
  6. Report any lost card immediately.

The list above should give you a very good idea of what I did wrong. It wouldn't have been all that bad if not for the fact that I was jobless for more than a year. No job = no salary = can't pay! As soon as I realized I would not make my monthly payments, I immediately called the credit card companies to let them know that I will not be able to make my next monthly payment on time. It was Diner's Card that immediately assisted me, I briefly explained the situation and they responded with a very simple process that took exactly less than a day. The biggest plus for Diner's is the fact that they have an office and staff that you can personally see and talk to.  All others used only call agents or email to communicate.  For one bank, it took more than a month to settle on a payment scheme, but the WORST was that "bank" who took me around in circles asking for the most illogical documents until finally when I told them that they were the only bank that does not seem to want me to pay them, they decided to approve my request for credit restructuring after almost 3 months from the day I informed them that I was out of a job. What was terrible was the fact that while they were processing my request, they kept on charging me late payment fees because they refuse to suspend my card even when I already requested them to do so.  I refuse to pay the late charges and told them that many just abscond on their credit card payments, but not me.  I want to pay and they are making it difficult for me to do so.  This is the reason why, I advise future credit card owners to check out the customer support service of the credit card company they apply to.  

Credit cards have practical applications in life, but it should be used wisely and thoughtfully.  My dictum today is..."if I can't afford it, I should not buy it"..."if I want it, I will save for it".






Disclosure/Disclaimer:  The author has no professional relationship with Diner's Card Corporation.  This post is written from the author's own experience and does not in any way guarantee the same for others..

29 comments:

  1. These are great lessons. For a time, I too became addicted to using my credit card. Now, I'm paying them back slowly but surely. I've not touched it for two months now. Wish me luck!!

    - Mich of Mich Eats and Shops

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    1. just say no...I had to learn that the hard way :) Good luck!

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  2. This is a very good article on Credit Cards Do's and Dont's. It provides valuable insights to readers on the proper use of credit cards- based on your experience.

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  3. I have one simple rule for credit cards. Don't spend more than what you can pay as credit card interest is crazily high.

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  4. Excellent tips here. My wife has 2 credit cards and mind you, she at times find it hard to maintain both orderly. Fortunately, she gave up one.

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  5. This post reminds of my own story! http://gemsdaily.blogspot.com/2011/12/for-years-ive-never-had-credit-card.html
    ... and until now I am learning my lesson! Lol!

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  6. suwerte, hindi ko kailangang mamurublema sa credit card kasi... wala akong credit... walang bangko ang mag-aaprove sa akin kapag nag-apply ako... hehehe

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  7. avoided credit cards for quite sometime, but lately I discovered the need for one. good thing there are debit cards now in the Philippines

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  8. I've actually been recently denied of a cc application. I guess it's a blessing in disguise since I really don't need one just yet. My cousin just urged me to apply for one. Anyway, I already know some of the things that you've pointed out here, as I've had the chance of paying for my kuya's cc bills.

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  9. I have a credit card for a year now but I have to cut it because I cannot control myself to buy this and buy that. So I decided to stop my shopping addiction. Though credit card is very important for emergency purposes. Really a big help.

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  10. This is really a nice share. Credit cards can help and good if you handle it really well.

    I would also like to advice those who have credit cards, if ever they are already at "unable to fully pay" zone to settle immediately or ask for terms to pay your debt and not to wait for their case to be referred by the credit card companies to legal. Credit card companies do give terms to pay off if you beg =)

    Another thing, there is a database that banks can access and can see list of names with adverse findings due to misuse of credit cards. Banks peek the database before they let you open an account, grant loans or gives you credit cards if you apply. So don't wait for your name to be listed in this database, it will end your dealing future with banks and other financial institutions

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  11. thanks for sharing your real story about credit card bad debt. Honestly we're not a fan of using credits cards, as we knew ourselves that we can't control our spending habits. so better get not get one. I believe in your quote, If you want it, save for it.

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  12. I don't have a credit card yet a debit card since I have the freedom since I take into account my own savings, interesting article for fellows who wants to apply for CC. that's it, to live within yer means. Cheers!

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  13. Just like you, I was so sure that I could manage having a cc but not until I have 5 ccs. I was juggling what to use and what cc I purchased with one item or so. Indeed, I'd follow your tips!

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  14. Exactly! You have good list here, I should read this always. hayst nakakatempt lagi na gamitin ang CARd:)

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  15. As convenient credit cards are, I'm still hesitant to get one. Sure, online purchases would be MUCH easier, but I'm afraid the temptation to 'swipe' every purchase would be too great! Very informative post, thanks for sharing.

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  16. very true and very helpful reminder. i only have one and i really have no plan of adding more. i'm even planning to have everything paid in 3 months time... so i'm not using it lately... :)

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  17. Yes you are right you should gather first info about the company before proceeding. Well, I don't have any credit card and I have no plan to get one so nothing to worry for me bout it.

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  18. I would love to comment much but I don't have a CC so I can't share that much thoughts. D: But good advice though!

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  19. thanks for the reminder plan to get another card, one of my cards is with a bank and I have a time deposit as requirement so when I can't pay the bank they are assured of money to get back from me, it is also shared with another family member and we have been using it for 6 years without problem. The new card I am really re-thinking if I need another one, hmmm... will re-read this post...

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  20. sa totoo lang natetempt akong kumuha para lang sa domain, hosting at itunes wekekek, but ill think more pa

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  21. Another credit card tip is to request for waiver of the annual fee especially if you're a good payer. :)

    Carey

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  22. I was once drowned with debts because of credit cards before. I eventually stopped using it and pay for my debts for almost 3yrs. I was so scared to get another credit card again since then. But now, I got myself a card again and doing my best to use it wisely and pay it ontime. haha!

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  23. this is actually helpful especially to someone like me who's planning on getting a credit card. thanks :)

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  24. I've applied to probably all banks for a credit card but all of them denied my application. I guess it could be a blessing-in-disguise for me as I prefer buying items in cash. :D

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  25. Credit card is very useful but the owner must always know his/her limitations. Discipline, self-control and sense-of-responsibility.

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  26. Very informative! Very helpful! It's very clear and audible to everyone's inner mind and whims and caprices for those who plan to have one soon.

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  27. OH my! I had quite unpleasant stories about having credit cards and I don't want to remember them as much as possible. i only maintain my BPI with minimal limit. These DOs and DON'Ts should be applied by users new and old alike.

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  28. I learned my lesson in using credit card the hard way! But at least it taught me valuable lessons that I apply in my life until now. I learned self control and Iiving within my means, now I am maintaining only 1 credit card and I always make sure to pay it off within 3 days from the day I used my card.

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