5 Ways to Manage Your Credit Card

Your credit card is a valuable tool if you know how to use it properly. It offers you convenience, flexibility and borrowing power. Likewise, using it irresponsibly can make it work against you, not for you. For instance, if you spend more than what you can afford to pay, you will end up in a pile of additional charges and unpaid debt.

But credit cards don't need to be synonymous with uncontrolled spending. Here are tried and tested tips for managing credit card debt.

• Limit your credit expenses to your discretionary spending
• Have cash on hand to pay for whatever you swipe
• Be proactive, not reactive on your monthly bills
• Monitor all your installments
• Keep one primary credit card to manage your spending

Take Control of Your Credit Expenses

The rule of thumb for budgeting your credit expenses is that you should limit it to the amount you’ve set for discretionary spending. Discretionary spending refers to your disposable income, or the amount of money you have left per month after you’ve paid for all essentials and set aside a portion for savings.

The best practice for budgeting is that you reserve 50% of your monthly income for necessities, 20% for savings, and the remaining 30% for discretionary spending.

Each time you swipe your card for items or services you can live without, make sure to take note of them so you can budget accordingly. It’s important that your monthly credit card bill does not go beyond the amount you’ve set aside for non-essentials.

Ensure You Have Cash on Hand for Every Swipe

Using your credit card has its upsides. Benefits of a credit card include incentives with every swipe such as travel points, cash back, installment payment options, and other rewards. However, make sure that with every tap or online use, you automatically set aside cash for each purchase. Doing so lets you fully pay off your outstanding balances and not leave them open ended. It also helps you remain conscious about your spending and make you think twice about future expenditures.

This is one of the best credit card practices as it gives you the confidence that you won't stay in debt. You also steer clear of accumulating a higher balance each month due to interest rates.

Be Proactive on Monthly Dues

To avoid bill shock or the unwanted surprise of a large monthly bill, make sure to keep track of each purchase you make with your credit card. It can be something as simple as downloading a financial app that keeps track of all your daily transactions in one spot. Afterall, the next most essential thing next to your wallet is your phone.

After each use of your card, make sure to record that purchase along with the amount. This lets you have a consolidated list or breakdown of your monthly spending, including your credit card transactions. If you record all of your transactions, you won't feel overwhelmed when your monthly bill comes in and you can easily anticipate all the expenses.

Furthermore, a wallet app or budget tool allows you to be proactive instead of reactive on your due bills. When you see that you’re starting to go beyond your discretionary spending, you can immediately cut back on unnecessary items, so you remain on track with your finances.

Keep Tabs on Your Installments

Dividing lump sum expenses into staggered monthly payments helps you manage your budget and afford expensive purchases, but it can also be harmful if you don't stay on top of your finances. Before you avail of another monthly payment, take note of the number of bills you're currently paying.

Utility bills will always be there plus the other credit card installment plans you already have. Don't risk another set of monthly bills if you think you're not ready for it and your financial future is uncertain. As nobody knows what the future holds, it's good to have some funds left in your income for emergencies such as medical expenses or home repairs.

One Card is Enough

If the one you have is sufficient to manage your discretionary spending, don't keep multiple credit cards. With only one credit card, it's easier to track what you're spending on and you're more likely to pay your bill on time. You can also maximize rewards to rack up points or amass cash back.

Having multiple cards is only beneficial if you can justify your spending or you get to utilize the various cards’ features. For instance, you may want a Travel Card if you have frequent trips so you can enjoy exclusive travel offers, free travel insurance, and unlimited airport lounge access. If you’re an avid online shopper, a virtual Mastercard welcomes you to a world of secure online shopping and a controlled limit for all your digital purchases.

Having multiple credit cards means you can tailor your card usage to maximize different types of rewards and adapt them to your lifestyle (e.g., if you are on the road often, a card that offers gas rebates, discounts with car dealers, and 24/7 roadside assistance is your perfect match). Having one card is enough to simplify your budgeting and spending, especially if you find it difficult to manage multiple cards.

Be a Responsible Credit Card Owner

Managing credit cards entails discipline, responsibility, and self-control. You can maintain a healthy credit by making sure all your transactions are within your budget and you pay off your outstanding balance each month. Spending within your credit limit also puts you in better standing with your bank.

Managing credit card debt is important and it doesn't have to be hard. By following the tips listed above, you'll be able to reap the credit card benefits that you deserve and use them to your advantage. Keeping these five best practices in mind will prevent you from falling into a debt trap.

Gain access to a wide range of privileges when you apply for a Metrobank credit card today. Enjoy rewards, perks, and additional purchasing power whenever you need it. With our wide range of cards, you’ll find the perfect one to suit your lifestyle.