I met Rheg Lagman, a financial advisor, at a personal finance seminar in September 2016. Of all the things we talked about, one instance I can easily recall was when he asked me if I have a credit card.
“I don’t have one because I’m afraid of debt.” With most of my transactions paid in cash and being part of a family whose parents don’t own a credit card, it was a distant concept for me to get one.
“Yes, getting into big debt can happen if you do not have the discipline,” says Rheg. “My wife and I use it to consolidate all our expenses and use the credit card promos to save more money.”
That was the time I was fully convinced that credit cards were not as evil, because I knew that he wasn’t selling and I could tell that they really did it. A month late in October, I got a hold of my first credit card.
My credit card carries a 3.25 percent interest rate per month or 39 percent per annum, but only if I spend incessantly on credit. The interest charge counts only if you’re late after the due date on your credit card statement.
The first time I saved with may credit card it was when P3,000.00 was deducted from an overnight hotel stay I
booked last February. There was an ongoing promo tied to my credit card that I read from a weekly newsletter, which I always check for great deals in line with big purchases I need to make.
Another way to save money is to get a credit card that fits your lifestyle so you can integrate it in your everyday expenses and get perks in the process. I got a rewards credit card because I’m not a frequent flyer and most of my expenses revolve on daily needs. I get 1 point for every P50 spent. I budget P1,000.00 to P1,5000.00 per week on groceries which will give me 80 to 120 reward points each month.
Some friends would tell me, “But that’s too low! You spent P4,000 to P6,000 on groceries and only got that amount in points?”
The way to look at it is that if I paid in cash, I don’t get reward points but just the benefit of having my groceries for the week. Using a credit card to pay for your budgeted expense is beneficial in the long-run once the points accumulate and the time has come to redeem your points. So far, I’ve already accumulated 1,850 points.
Indirectly, it is helpful to have an automatic tracking of my big expenses because all of it is itemized on your bill. It sounds easy to track expenses on mobile apps such as Expensify and Wally. But having a monthly statement can be beneficial.
Credit card holders may opt for e-billing via e-mail instead of hardcopy by snail mail.
I wouldn’t say that getting a credit card is the ultimate solution to help one in saving money but based on my own experience it is a great financial tool, plus the discipline of treating it as a tool helps improve the way you handle your finances helps you avoid borrowing money for unnecessary purchases.
Kristel Silang is the content manager at MoneyMax.ph, a financial comparison website aiming to help Filipinos save money through diligent comparisons of financial products.