For young Filipino adults, starting with a credit card can feel both exciting and daunting. A credit card offers a level of financial flexibility that can be empowering, providing access to funds in emergencies, helping to build a positive credit history, and even rewarding you with perks like cashbacks or discounts. For those who are new to credit, it can feel like an opportunity to take charge of personal finances and manage money independently.
However, the excitement often comes with a sense of caution. Credit card use carries the risk of accumulating debt, which can quickly grow if not managed carefully. Many young cardholders may worry about overspending, missing payments, or facing high interest rates. Without a clear understanding of how credit works, it’s easy to fall into habits that can lead to financial stress.
Fortunately, young Filipino adults can refer to this guide to help them navigate the ups and downs of credit card use and ensure they become responsible credit card users right from the start. Here are some tips to help you get started on your journey:
1. Choose the Right Credit Card for You
Before you complete a credit card application in the Philippines, be sure you’re applying for a credit card that aligns with your specific needs. Many credit cards come with rewards programs that can provide rewards that meet your lifestyle requirements. If a good portion of your spending each month comprises grocery items, then you should know that the Landers Cashback Everywhere Credit Card gives you up to 5% cashback at Landers Superstores. When you shop at Landers, you’ll start with a base cashback rate of 3% if your total credit card spending is below PHP 20,000. This rate increases to 4% when you spend a minimum of PHP 20,000, and then it increases further to 5% when you accumulate a total qualified credit card spending of at least PHP 50,000 during the month.
If you often dine out, the Landers Cashback Everywhere Credit Card is also beneficial, as it lets you earn 2% cashback points for dining spends. Additionally, you can earn 1% on all other qualified spending. This just goes to show that when you select a card with rewards that suit your lifestyle, you can maximize benefits without overspending.
Moreover, check if there are other benefits available that come with your credit card application. For instance, the card currently doesn’t come with annual fees for new applicants. This helps you minimize costs once you become a credit card holder.
2. Use Your Credit Card for Needs, Not Wants
While it’s tempting to use a credit card for fun purchases, it’s better to prioritize necessary expenses like groceries and food purchases. When you focus on needs rather than wants, you avoid creating unnecessary debt. This practice also teaches financial discipline, helping you recognize which purchases are essential and which ones can wait.
3. Set a Budget for Your Credit Card Spending and Stick to It
For many new credit card owners, it’s easy to forget that credit card spending is still spending, and without a budget, you can quickly find yourself in bad debt. With this in mind, it’s best to create a spending limit each month based on what you can actually afford to pay off. This means that if your budget allows you to spend only PHP 20,000 on essentials, you should avoid going over that limit—even if your card has a much higher credit limit. Cultivating this habit builds discipline and ensures you don’t end up with an overwhelming balance.
To further take charge of your daily spending, consider assigning limits. With the Landers Cashback Everywhere Credit Card, you can do this for different types of credit card transactions on the Maya app, including foreign transactions, online payments, and contactless payments.
To access and manage your spending limits, simply follow these steps:
- Log in to Maya and go to Cards.
- Select the credit card you want to manage.
- Then, tap the gauge icon to open the Limits and Controls screen and set daily spending limits.
4. Build Strong Payment Habits
Another way you can be a responsible credit card owner is to adopt positive payment habits, starting with paying your credit card balance in full each month. When you pay the entire amount due, you essentially use the credit card interest-free. If you can’t pay your balance in full, aim to pay significantly more than the minimum amount. Paying more reduces the principal balance faster, helping you save on interest and become debt-free sooner. Additionally, consistent full payments contribute positively to your credit score, as it shows lenders that you’re a reliable borrower who doesn’t carry debt over time.
It’s also a good idea to pay your credit card balance on time. Late payments can lead to costly fees and may harm your credit score. To prevent missing your credit card due date, consider setting a reminder on your phone a few days before the due date.
5. Review Your Monthly Statements
Regularly checking your statement is also a good practice for responsible credit card use. It helps you spot any errors or unauthorized charges early. Reviewing your transactions also gives you the chance to evaluate your spending habits and identify areas for improvement. If you notice a recurring purchase that you don’t need, consider cutting back on it or reallocating those funds toward something more essential.
6. Understand Your Credit Limit
Your credit limit represents the maximum amount you can borrow, and staying well below this limit is beneficial for your credit score. Ideally, you should stay under 30% of your total limit and avoid maxing out your card. Maxing out your card represents a high credit utilization ratio, which may reflect poorly on your credit history and make it more difficult to get loans in the future.
Being a responsible credit card user requires building good habits that align with your financial goals. For young Filipino adults, starting these practices mentioned above early can lead to a positive credit history and a healthier financial future. They can also ensure you enjoy the benefits of credit while avoiding the potential downsides. Remember, every small step you take toward responsible use of credit builds the foundation for financial success.
*Transactions that don’t qualify include: cash in, cash advance, quasi cash purchases, casinos and gambling, fuel, supermarket, pharmaceuticals, utilities, telco, and government.
