October 14, 2009

Addicted to Cards

Save for some, where reason for card debt is an emergency (family beinghospitalized, etc.) or lost source of income...
For most of us the culprit for card indebtedness is the big "S". Let's face it shopping is addicting. And credit cards come in handy if you don't have cash with you. Unfortunately for some its too late in the card swiping game before they get to realize that they are actually spending more than what they can afford to pay after. Thus you end paying only the minimum amount and the outstanding balance is charged a whopping interest of 3% (that is 36% annualy), plus so many other charges – many of which you've only heard of now.

Here's some tip on card usage:
(1) Know your budget and DO NOT spend outside your budget.
(2) Maintain only two cards (the 2nd card is an emergency card). Onecard is enough. Cards are temptations, if its in your wallet, you are more likely than not to use it (even if you don't need to). Trust me it is difficult to balance multiple cards in your wallet.
(3) Mind your due dates and pay on time. Card centers have grace periods of 3-5 days, but if your payment gets posted after the grace periodyou are charged an additional for late payment.(4) Get the most out of your card – charge your utilities to your cardand earn rewards.
(5) Do not do – CASH ADVANCE. For cash advances you are charged with a cash advance fee right away and it is still part of your outstanding (meaning part pa din into ng papatawan ng interest, so double whammy).
(6) If possible pay in full. Isipin palagi na sayang ang interest (If your outstanding is P10,000, for an interest of 3% that is P300 already. So if you pay P400, effectively you have only paid for the interest).
(7) Learn to read the fine prints and the asterisk "*". There is always an added condition for freebies.

For those who have read this posting way too late... you can try asking your card issuer for an account restructure. In restructuring the interest may be lowered or waived, other charges may also be waived. Tell the card issuer, you have so many cards and you fear you might not be able to settle everything thats you why you want to pay them, but can only manage so and so amount... some issuers will be willing to waive the other charges (not the principal though).

I have not heard of anyone who was put in prison for not paying his loan,except if you issue a check that bounces that would be estafa. Otherwise, you would just be asked to issue a promissory letter, "promising to pay". If you do not have a means to pay they can't force you out of your home nor confiscate your belongings (unless the issuer is able to prove that themoney used to buy your stuffs were charged from your card).

Ensure to pay of your dues. Credit card companies has an association thatshares bad records and the bad record also gets reported to the Bankers Association of the Philippines . The record stays there forever, unlessyou settle fully the total amount due, our name is still there but with notation that you have settled already. This would affect your credit rating and it would be difficult to get a loan from a Bank (not sure if SSS/GSIS also gets access to these reports) when you need one. Bad records would may also harm your employability. Good companies before hiring people checks on their candidates credit rating/record. Moreover, if you have plans of migrating/working abroad, your bad credit rating may also surface.

In summary, use your card wisely!

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