‘Tis the season for Credit Card swiping!
The “ber” months are here!
Christmas songs and jingles are ready to take over the airwaves.
Christmas decors and lights are slowly appearing in public spaces.
Along with all these preparations, it is the season of lots of festivities and gift-giving.
Brace yourselves because temptations will be everywhere!
Most especially if you have your own credit card.
Credit card companies will bombard you with marketing messages: installment offers, cash advance promos, and “Buy now, pay later” promises. Here’s an example of what I’m talking about:
This Christmas season, we should make ourselves more aware and smarter in making our purchasing decisions.
Regardless of the season, though, if you own one or more credit cards, here’s a question I’d like you to ask yourself (and/or your partner):
Do you pay your Credit Card bill in full?
I was talking to one of my clients recently and I was telling them about how they can use their credit card to automatically pay for their life insurance premiums. (Contact me to know more about this)
Aside from the low chances of missing their due dates, another advantage of doing this is that they’ll get rewards points when they use their credit card.
This client, however, didn’t want to charge it in their credit card. Of course, I asked why.
She said that they were being charged finance charges monthly. So, I asked if they paid their credit card bill in full. She said “Yes.”
Weird, right? Do you have the same experience?
When I pay my credit card bill in full and on time every month, I never get any additional charges. I just pay for what I charged to the card.
Credit cards are for convenience
I don’t see my credit card as a source of “free money.”
I see it as a tool for convenience. I don’t need to withdraw and pay with cash, plus, I get perks and benefits when I use it to purchase stuff.
I don’t use it to pay for stuff that I can’t afford.
I am going to buy groceries anyway, so I charge it to my credit card.
I am going to pay my electricity, internet, water, and phone bill anyway, so I charge it to my card.
I am going to pay for my life insurance premiums anyway, so I charge it to my card.
If I can pay it in cash, I can charge it to my card. Simple.
Why you should pay your card in full
Here are the benefits of paying your credit card bill in full (and before the due date!):
- You won’t get charged with finance/interest charges
I’ve talked to clients who only pay for the minimum amount indicated on their credit card bills. This minimum amount is a trap! Credit card companies earn a lot from so-called “minimumers” or those who just pay the minimum amount each month. This is very tempting. If you continue paying for just the minimum amount and you continue to charge purchases to your credit card, you will end up paying more and wasting more money!
Get out of this financially deadly trap by simply paying your credit card on time and in full each month.
- You won’t get charged with late fees/penalties
The tip to surely avoid these late charges is to pay your credit card bill in full at least three (3) days before its monthly due date. Also, what works for me is whenever I get notified of my statement due, I make sure to put it on my calendar and reminders. I use online banking to do cashless and queueless payments to my bill that’s why I put a three-day processing buffer to make sure that my payment is posted on or before the due date.
Late fees or penalties may seem small but when you look at it on a 12-month period, it would be significant.
Imagine that instead of paying for late fees and interest charges, you simply add that to your savings and investments!
That’s another way of looking at it. Pay yourself instead of paying the credit card companies!
Do you have any tips / suggestions / questions / comments? Feel free to comment down below and don’t forget to share this article with your friends and family!
To our success in all areas of life,
Argel Tiburcio, CIS
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