How many credit cards do you need? 5 tips to find out

MANILA - A male customer in the United States was recently reported to own a record 1,497 credit cards. While he is no doubt the exception, the question of how many credit cards does one person need comes up quite often.

Most credit cardholders own more than one credit card. Like most credit cardholders, you may find that having a main credit card and a spare card ensures that you always have access to ready payment tools when needed. On the other hand, you may have a wallet stuffed with plastics that you cannot even monitor. If so, you may have asked yourself if you have one card too many, and wondered how to make the best use of your cards.

There are just as many reasons to have multiple cards as there are to have just one or two that you can manage. The truth is there is no magic number as to how many credit cards you should own. Your spending style, consumption pattern, and cash flow considerations are all factors that can help you decide how many credit cards you should have.

Here are five tips to help you decide how many and which credit cards you should keep.

1. How much credit you can handle?

Are you the type who would shop mindlessly and could not stop for as long as you have not exhausted your credit line? If so, then perhaps you should not hold on to too many cards and try to keep credit limits to levels that would not send you to financial disaster. On the other hand, if you need a large credit line, presumably to use in business or to accommodate your spending needs, then go for a credit card or cards that can provide you the spending power that you can handle.

2. Examine how you use your credit card.

Are you using your credit card for various unrelated needs? If so, it may be helpful to have separate cards for different purposes—say a card for your household needs, and a separate one for your office-related expenses. Having a separate card for your office needs will also be easier for recording purposes. If you regularly make purchases in a foreign currency, a separate dollar-denominated credit card may be handy.

3. Play your cards right.
When you have multiple cards, you will also have to contend with managing many records and meeting different payment deadlines. If you aren’t organized enough to remember payment schedules, then you are better off holding on to just a card or two. Any more will be too much of a hassle for you and worse, could even lead to unnecessary finance charges if you fail to remember your payment due dates.

4. Look at your cash flow.

Check each card’s statement cut-off and payment date and see if this coincides with your cash flow. It may be more manageable, cash flow wise, to have two credit cards with payment due dates that are two weeks apart from each other. In so doing, you can pay off each bill in full without saddling you with interest charges.

5. Check out annual fees.

While it may be nice to have a big credit line and multiple credit cards, make sure to keep an eye on annual fees. Credit card companies charge anywhere from P2,000 to more than P4,500, depending on your type of card. These fees are completely justifiable if you actually use your credit line, want to have emergency funds, and enjoy the other features of the card.

However, if you have many of these cards that are simply stacked inside your wallet, then you are throwing good money for nothing. Determine which cards are worth keeping and paying for, and surrender the rest.

These days, credit card companies are competing for your business and loyalty by offering gifts with your spend and rewarding you with points that you can redeem for a wide range of items. Make these count as you decide what to keep or what plastic to own.

Look into your consumption pattern and determine if there is a card that can offer you rebates or freebies in exchange for your loyalty. For instance, if you are a heavy traveller, credit cards that issue frequent flyer or mileage points may be useful for your purposes. If you patronize a particular store, it may be helpful to have a card that gives you points in exchange for your purchases in this store. Or if you like rebates, a cash back card might be right for you.

When choosing which credit card to keep and to let go, as with any spring cleaning project, one rule applies – only keep what are most relevant for your needs.

source: www.abs-cbnnews.com

Swipe away: 3 smart tips on how to use credit cards

MANILA - Credit cards are extremely convenient to use. Most credit cardholders have to stop themselves from going into bouts of emotional spending, or impulse buys, especially when card-based discounts come into play.

But that doesn’t mean that you should avoid your credit card completely, if you have one. It means being able to manage your use so that you don’t drive yourself deep in debt.

The best advice that Josh Frank, senior researcher at the Center for Responsible Lending, can give is: "Take advantage of the perks, and avoid the penalties."

Now that credit scores may become a thing in the country, here’s one other reason to stay well below your limit: standard credit scores use credit utilization as a major metric. This is the ratio of credit outstanding to maximum credit available on your card. The lower this is, the better.

There are plenty of reasons to use a credit card, too: automatic billing, cashless transactions, rewards programs, and others.

But remember that a credit card is a way of borrowing against future income, and not an income source in itself. It’s not free money.

So how exactly can you use your credit card without going into debt?

Mobile users can view the desktop version of the slideshow here.

source: www.abs-cbnnews.com

Ever heard of 'pay later' installment plan?

MANILA, Philippines - One of the biggest joys of owning a credit card is being able to pay for items on installment basis. “Gives” or amortized payments are quite attractive to salaried employees who have a steady source of income and can predict how much they can afford to pay over a certain period.

Thanks to installment terms, credit cardholders can have, say a new television and pay only 1/12, even 1/24 of the cost. Just swipe that plastic and start watching your favorite shows in the biggest screen and best resolution your credit card can buy. What’s more, special promotions like 0% installment schemes have really made deferred payments quite irresistible.

But wait – credit cards have also began offering Pay Later. Should you bite?

Before you start shopping, it might be helpful to first understand the three payment schemes being offered out there.

1. Zero percent interest installment plan.

This is probably one of the best installment plans available in the market today, since it allows you to pay for your transaction in equal tranches without having to pay for interest. However, it may not cover all kinds of transactions and may not cover all the products sold in a store so check before you swipe.

2. Regular installment plan.

In this scheme, payments can be spread out over a period of time, with interest charges. The interest may vary depending on the length of the transaction and from one credit card issuer to another.

3. Pay later installment plan.

Under this plan, the monthly installment due on the transaction and the monthly interest will be billed to the cardholder starting on as late as the third monthly billing statement cycle after the original transaction date. This means that if you do your shopping in December, you will be making payments only in March, instead of January. This is a great option to use if you know that your cash flow for the immediate term will be tight.

Now that you know your options, here’s how to use these deferred payment schemes to get the most bang for your buck:

Forecast your cash flow.

Before any purchase, make sure to consider your cash flow. How much can you realistically afford to pay in a month for your purchase? Remember that if you opt for a shorter payment term, you will pay less interest but higher monthly costs. While a longer tenor will be easier on your pocket, it can also incur higher interest.

Choose the plan that is best for your needs.

Assuming all of the above options are available, consider which of the different installment schemes being offered matches your requirements. If you have a cash flow concern and would be more comfortable making your first installment payment in the future, instead of next month, then avail of the pay later installment plan if it is available. If you are more concerned about the amount of interest that you will have to pay, then the zero percent interest plan is appropriate for your needs. If you would rather spread out payments over a long period and are willing to pay interest charges, then check out the regular installment plans.

Set a budget.

It’s tempting to shop when you know that you can defer payment and pay in installment. However, all these transactions do add up. If you lack discipline or planning, using the deferred payment option could lead you to overspend and may break your budget. Whether it’s zero percent or regular installment, even pay later – don’t forget, you still need to pay.

Ask and you will receive answers.

If you are unclear about the terms of the installment plan that you have chosen, do not hesitate to ask for an explanation from the merchant or the issuer of your card. By asking, you may even come across other payment options that are more attractive and practical for you.

Watch out for seasonal promotions.

Occasionally, credit card issuers offer promotions where they further sweeten the deals that they offer. Discounted products or services may be offered on installment, or gifts with purchase, or your credit limit may even be increased. If you enjoy shopping on installment, make sure you keep an eye out for these offerings from time to time.

Department stores, groceries, car dealers, service centers, and boutiques, among many others, now offer Pay Later options so make sure to check your payment options before you make the purchase to get the best value for your hard earned money.

source: www.abs-cbnnews.com

Why credit cards shouldn't be 'double-swiped'

MANILA, Philippines - "Don't double-swipe credit cards" -- this is the message of the Credit Card Association of the Philippines to commercial establishments and retailers.

CCAP spokesperson Alan German said the practice of "double-swiping" is being discouraged since this may compromise the data security of credit cardholders.

Double-swiping is the act of merchants completing a second swipe of the card at the Point-of-Sale (POS) system, even after the transaction has been approved.

The CCAP said any credit, debit or prepaid card should only be swiped using a POS terminal issued by the bank, not the establishment's own POS system.

German said criminal groups are now targeting establishments' own POS systems, stealing payment card data and PINs of customers.

"In many cases, the second swipe results in the credit card’s full data to be retained by the merchant in its own system. Effectively, this unnecessary practice increases the merchant's vulnerability to potential data compromise... This loose data, so to speak, can then be used to create counterfeit cards, engage in identity theft, and perpetrate fraud,” he said.

The CCAP spokesperson urged merchants to use other record-keeping methods for their retail operations, instead of double-swiping the cards.

"More often than not, the second swipe is unrelated to authorization or transaction settlements. Instead, it is used to create a secondary record to support the merchant's accounting, reporting or customer-relationship management programs," German said.

"Instead of using customers’ payment cards, merchants can explore alternatives such as loyalty account numbers, transaction IDs, or truncated primary account numbers to track customer activity, if necessary."

German said card issuers and merchants should understand the risks in double-swiping the card, and should undertake measures to protect their businesses.

He said CCAP is committed to increasing data security awareness to ensure that all stakeholders are aware of potential vulnerabilities and associated risks.

source: www.abs-cbnnews.com