Do you have a credit card or are considering getting one? Here are some simple tips to help you use a credit card wisely. With the surge of online shopping and paperless transactions these days, it’s a great time to talk about some financial life hacks.
Let’s get real for a second. Free shipping, discounts, five-star reviews, easy credit/debit card payments… these easily trigger our holiday add-to-cart impulses. So, why not check in on each other and share some simple ways to make sure our e-shopping sprees don’t go out of hand? Comment below and let us know how you’re doing with your credit card wins and woes.
This is for us ordinary shoppers and yuppies. As a consumer with a credit card (I use my Citibank card mostly), I have a fair amount of practical experience swiping my card and managing my own finances as best as I can.
Hopefully these tips from what I’ve experienced so far helps you make wise decisions on whether you’re ready for that big splurge and be more responsible for owning/acquiring a credit card.
1. Track your budget / accounting easily on Google sheets
There are some mobile apps out there for budgeting or accounting. I tried apps years ago, but I couldn’t sustain using it. For me, the good old fashioned excel spreadsheet works best, since it can be customized according to your specific needs and spending behavior. You can go as simple or as complex a spreadsheet as you want.
Up the ante by taking it to the virtual cloud via Google Sheets and handle your personal accounting wherever you go, whether on your laptop, phone or tablet.
What works best for me is creating an excel file for a year and 12 sheets/tabs within that file for each month of the year. So I get to tally my monthly cash flow easily and automatically using excel formulas. Easy on the eyes and on effort! Comment below if you have a different style/method and let’s share notes on best practices.
2. Keep special tabs on installment payments
This one is so important. As opposed to one-time payments, installment payments are those that you are billed for on an extended period, like in six or 12 months, maybe more.
Paying in installments is so tempting as some of us may tend to purchase multiple gadgets, appliances, shopping sprees and whatnot simultaneously. These installments can pile up and balloon beyond our paying capacity if we’re not careful.
So once you’ve set up your accounting tool in Google Sheets for all 12 months, or however you prefer to do your accounting, I highly recommend adding a 13th tab solely for Credit Card Installments.
If you keep these recurring installments in check, knowing the total amount you need to pay for your card monthly can help prevent you from mindlessly swiping your card beyond your spending capacity. A good credit score is always nice to have.
3. Waive annual membership fees
Credit cards will often charge users an annual or monthly fee that stacks up to a fairly large amount.
People sometimes request banks to waive or reverse this fee so they don’t have to pay it. Some banks easily reverse the fees without question as long as you have a good credit score. Normally, your score is considered pretty good if you don’t have any unsettled late payments.
Other banks though might give you a hard time and decline your request even if you pay well. You could throw in the towel at this point and call it a day.
Or, if you are gutsy and determined to not pay extra for your card after strike one, some people tell the bank representative that they’d rather have their credit card cut if the bank doesn’t waive the membership fee. Say this with confidence and conviction, but don’t be rude and avoid raising your voice — respect is key. Anyway, the bank may begin to buckle and give in after that.
Comment below if you think that this method of reversing the membership fee is ethical or not, as well as any other tips you want to share. Let’s keep the discourse open on what’s right for both consumers and financial institutions.
4. Avoid late fees: keep a calendar and pay on time
I’m sure you have your planner ready, whether it be on paper or digital. So just make sure to pencil in the payment schedule as well for your credit cards and other important bills. Consider paying two or three days in advance to factor in processing time in case you are using third-party services to pay your bills.
Try using Trello, Google Calendar, or Apple Calendar for ios users. Pen-and-paper works just as well too. What do you use?
5. Earn as you spend: take advantage of rewards/rebates
This one is really useful if you use it up well. I’m not a heavy credit card user, I mainly use a Citibank credit card that earns rebates when I gas up the car. Considering that I’m not a heavy user, I’d still earn solid rebates now and then that add up to a decent amount at the end of the year.
Other credit card variations might offer rebates/rewards for other things, like for grocery shopping. Look into the rewards/rebates system that best matches your lifestyle so you can get the most out of it, on top of flexible payment terms on your purchases. Reap all the perks of having a credit card!
6. Automate payments with caution
Automation is one of the best ways to use technology. It frees up our time and attention so we can focus on other more important things in life. Take advantage of this feature perhaps by using your credit card to automatically pay your utility bills; and then using auto-debit to get the bank to pay your credit card bills for you via your savings account.
Just make sure that you know your cash flow very well and you are confident that the bills/expenses charged on your credit card won’t exceed your disposable income. Otherwise, you might want to stick to doing things yourself. Automate at your own risk.
7. Save up for a contingency fund
It’s always sound advice when we are told to set aside a portion of our money for long-term savings/investments or just for a buffer when unexpected expenses come up.
Try setting aside at least 10% of your monthly income for contingency. That way, even if your automated bills go a little overboard, you still have some leeway/flexibility. With some rainy day savings, you can be at ease as you live your life to the fullest.
8. Use the credit card app’s “Temporary Lock” feature when necessary
In some worst case scenarios such as when you’ve maxed out your budget or perhaps you misplaced your precious card, check if the credit card has this user-friendly temporary lock feature built into the banking app.
I recall this one time when I was gassing up the car, the gas station staff accidentally switched my Citibank card with somebody else’s card. Yikes!!! I called the bank straight away and asked them to shut my card down immediately. Luckily, the other card owner circled back to the gas station and we were able to exchange cards. Whew!
Back when this happened some time in 2017 or 2018, the temporary lock feature wasn’t in the Citibank app yet. It was shortly after that incident when I noticed they installed the temporary lock feature. It’s great for cases such as mine where a user doesn’t really need to permanently cut the card, but just lock it momentarily while trying to retrieve it. Other banking apps might not have this nifty lock feature on their app, so you might want to check first.
Hopefully these easy and practical credit card tips help you feel more empowered to use your card responsibly. Feel free to share your experiences too in the comments section. Happy adulting!!! 🙂
