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Success Wizard: Manage Your Credit Cards Effectively

(Originally published on August 28, 2011; reprints previous original material published in this section)

By Jordan Patente

Whoever said genies aren’t real? While they no longer live in traditional magic lamps, they’ve moved to a smaller and more powerful house: the credit card. One swipe  (no need to rub!) and you’ll get what you want. And unlike the old genies, the credit card will not ask you to trade your soul in exchange for three wishes—you just need to affix your signature.

This is the life most of us are living. We treat the credit card as the modern day genie. This genie can give you the life you’ve been dreaming of, but on the other hand, it can also make your life miserable. If mismanaged, it can ruin you, your family and even your career.

With the help of my business partner Ramonchito Alba Flores, I will share tips on how to use your credit card and maximize its numerous benefits.

Your credit card management style ref lects your cash management approach. If you handle your cash right, you will do the same thing with the credit card. This means that if you have troubles handling cash, expect to have more of it with credit card. If you’re looking at a credit card to settle your debts, think twice and figure out long-term solutions.

For beginners, it is wise to maintain only one credit card account. Once you are confident about managing your credit card finances, then you can get another account that will give you more perks.

Choose your credit card wisely. There are several types of credit cards available. You can pick the most suitable card based on your requirements and financial situation. I highly recommend an account with annual membership charge. If you manage your account dues well and have no outstanding balance at the end of the year, your annual fee can be waived.

Make wise decisions about purchasing items you need versus those you simply want. Using your credit card responsibly means recognizing which things you need and which you just want. Use your credit card to buy things you can afford. Living a borrowed lifestyle and using a credit card as a substitute for cash is the quickest way to get into debt. To purchase something is easy, but it is hard to pay higher interest rates on credit amount. For ordinary purchases, leave your credit card in your wallet and use cash or a debit card instead.

Zero percent deals are good, but only if you have the cash to pay for these items. If the lack of cash is your reason for availing of the deal, forget it. Don’t count your chicken if the eggs have not yet hatched. If you have full control over your credit card, only then can you start enjoying credit card deals and promos. You can charge most of your expenses to it.

Be in touch with your credit card company and pay your monthly dues on time to avoid interest. You should have also knowledge of late fees, extra charges and hidden factors of your credit card account. Knowing your credit card terms and conditions will help you manage your debt effectively.

Don’t get into the habit of making minimum-only payments. Making only the minimum payment each month increases the amount of time it will take to pay off your debt. It also increases the amount of interest you end up paying. Spend based on your financial status.

Use your credit card if you have cash on hand. After the credit card purchase, save the cash to pay for it, and it should not be used until the due date comes. This strategy will earn credit card perks for you to enjoy. Credit card companies will entice you to spend and be indebted to them. That’s perfectly fine, but paying them so much interest is not.

Don’t give your credit card to someone. If you want to share your credit card, share it with someone you trust. Supplementary cards are good if the other person has credible exceptional financial management skills; if not, forget it.

Stay within 30 percent of your credit limit. Lower balances are easier to manage.

Communication is key. Let your creditor know in advance if you won’t be able to make your monthly payment on time. The worst thing you can do is simply forgoing your credit card payment. Most creditors will assist you if you let them know before you miss your payment. Simply call your creditor, briefly explain the situation, and ask that any late fees be waived. As a one-time goodwill gesture, credit card companies will grant you that. Let me end this article with a memorable story. This took place a couple of months ago and it will continue to happen as a result of good credit card management. Hopefully the above tips will earn you the same experience in the near future.

It was such a busy week for Dynamic Empowerment Philippines Co. that my business partner and I decided to unwind that weekend. We had a good meal and we watched a movie. The movie left us with topics to chat about over coffee. Just before we left the mall, for the first time I appreciated their parking system. It was an excellent day!

Dinner to parking was all-expense paid—thanks to our credit card. Credit card providers offered good promotions with our prior purchases and we’ve accumulated enough

receipts to exchange for all those perks that day. This, too, can happen to you. Don’t let your debt manage you; instead, manage it and enjoy boundless opportunities.

 

Jordan Willy Patente is the president of Dynamic Empowerment Philippines and has been a success coach for five years. He has also conducted motivational talks and directed musical and theatrical productions.

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