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Monday, February 25, 2008

How to use credit card for daily expenses

Many people thought that using credit card is a first step to bankruptcy if you just mount up the credit balance. The interest is ridiculously 18% - 27% and it can bury you deep into huge unpleasant debt and you can’t get back. But if you use it wisely, you may find credit card isn’t that bad like other people said. For me, it gives you a lot of benefits and I commonly use my credit card to pay my daily expenses.

How to use credit card for your regular expenses

+take advantage of interest-free period.
Pay your balance in this period of time. My credit card has the 20-days interest-free period and I fully utilize it to pay off my balance. See what is interest-free period or grace period

+make sure balance is zero every month.
Financial charge occurs after the interest-free period expires. Do not waste your money paying interest that you can surely avoid. Pay full amount of balance every month.

+make a list of things that you really need.

To make sure that you're not desirably swiping your card for any unneeded item, make a list before you enter the shopping mall. Just fight your temptation whenever you see something nice and interesting. Remember, stick to the list.

+Pay bills through credit card.
I usually pay electric bill, Internet connection bill, and water utility through credit card every month.

+Avoid buying things that you cannot pay back.
Do not use your credit card for buying something that values more than your monthly income or something that you can’t afford to pay back in a month.

What are the benefits of using credit card wisely
Increase Credit rating
If you use credit card regularly and pay the balance accordingly, your credit rating is likely to increase and you can easily apply for any loan.

+Gain bank's confidence
The bank sees you as a discipline customer and the bank gains confidence in you. Your reputation rises as you pay your credit card statement regularly without a miss.

+Pay your regular bill in one account
It is convenient to pay your bills in one account. It’s better if you do an automatic debit from your credit card rather than pay bills through over-the-counter method. Save money, petrol, and time.

+Get redemption points from credit card instead
Take a look at your credit card offers for gifts and other benefits. My credit card (Maybankard Visa) offers treat point in every ringgit I spend. Accumulated point that I’ve collected can be traded with gifts and items show in the catalog.

Beware, do not use credit card for the purpose of
Please no matter what, do not use credit card for
++borrow cash money from credit card.
++buying new luxurious hand phone.
++pay your down payment of your new car.
++purchase laptop and computer.
++buy game consoles: PS3, nintendo, xbox.

But if you do so, you may dig your own grave of debt. Credit card may gives you a lot of benefits if you use it wisely. One of the big advantage that I mentioned above is credit card can increase your credit rating.

Other articles on how to use credit card wisely.


Pan Lee 2/26/2008 6:43 PM  

I think CIMB credit card is better than Maybank. CIMB offers free for life annual fee

Anonymous 2/26/2008 7:00 PM  

Thanks for the article, really good one.

Bala Singh 2/26/2008 8:48 PM  

Hey thanks for the advice

Nadlique 2/26/2008 9:14 PM  

Hi :)

Alright, assume the credit card's interest rate is 15%.

Now, here's a thought.

What do you guys think about using the money that is tied up with the credit card, to be invested in a financial instrument that yields 30% per annum?

Park Je 3/11/2008 9:26 PM  

Is there any kind of investment that offers you 30%?

But for me, it's better using personal loan because interest rate is less than credit card.

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