Money Tip: Don’t be afraid of the credit card – Make it work for you!

by Paris B on · 49 comments

in Discussions,Musings,Tips

Every now and then, I delve into the practical side of life. Its not always beauty related but will, I hope, be something useful. A while ago, I talked about credit cards and how not to use them and the ensuing discussion tells me we have a bunch of financially savvy ladies here – kudos everyone for not getting yourself into credit card debt, even though you can! icon wink Money Tip: Dont be afraid of the credit card   Make it work for you!

credit card2 Money Tip: Dont be afraid of the credit card   Make it work for you!

But an underlying theme I got was how people seem to fear owning a credit card. Ladies, there’s no need to fear it, its just a piece of plastic after all! icon wink Money Tip: Dont be afraid of the credit card   Make it work for you! What we really need is self control. Once you get your self control in place, you can have 10 credit cards with a credit limit in the hundreds of thousands and still NOT be in credit card debt. In fact make your credit card work its butt off for you! icon wink Money Tip: Dont be afraid of the credit card   Make it work for you! So really, I’m telling you to use the bank, not let the bank use you icon wink Money Tip: Dont be afraid of the credit card   Make it work for you!

Learn your credit card benefits and get maximum use of it

If you have a credit card, find out what its benefits are. Sometimes, if you purchase flight tickets online (and many of us do these days) most credit cards offer some form of insurance. So if you have problems with your flight e.g. flight delays or flight cancellations, you might be able to make a claim if you paid by credit card.

Another benefit I have on my card and make use of is the use of the Premium lounge at the airport. So when I do travel, I get a decent place to wait at the airport with food, drinks and free internet. Good wot? icon wink Money Tip: Dont be afraid of the credit card   Make it work for you! I hate the bank but I suck it up for this benefit icon razz Money Tip: Dont be afraid of the credit card   Make it work for you!

Otherwise, look at the discounts on offer or cash rebates. Some credit cards offer better discounts than others for retail or dining. Some offer attractive cash rebates you can use towards off setting your bill. Some cards even allow you to use your rewards points at the point of sale so I’ve gotten “free” coffee and breakfast at Coffee Bean and Tea Leaf, or paid for stuff at Robinsons just by utilizing my rewards points at point of sale.

Don’t use more than 2 credit cards at any one time

This is mostly due to practicality. Here in Malaysia, we have an annual Government tax on each credit card and although RM50 a year doesn’t look like much, why spend that money unnecessarily? I keep my cards down to 2 and where possible, I try to ask for a waiver (unsuccessful thus far) or use my rewards points towards the government tax.

Another reason to not use more than 2 credit cards each time is to ensure you maximise your reward point or rebate collection. If you have 5 cards and spread out your spending across all the cards, you will find that your reward point collection will stagnate. However, if you use one or 2 cards only, its faster to accumulate points or rebates and easier to get benefits too.

Learn to read your statement and stretch your credit card payments

This one’s a slightly trickier one. I can sometimes charge an item to my card and not have to pay for nearly 2 months or about 2 pay checks. The secret lies in knowing how to read your credit card statement.

credit card Money Tip: Dont be afraid of the credit card   Make it work for you!

First, identify your statement issue date. This is the date when the bank issues your statement (not the date when payment is due) so that is the “cut off date” for you. Anything you charge immediately after your statement issue date goes into the next billing cycle. If you charge it just before your statement date, it will hit your card almost immediately thereby wiping out all benefits of credit.

Using the example above, if I charge something to be card on 20 March, it would be due on 10 April. If I had waited 2 days to 22 March, it would be billed on 21 April and I only have to pay by 10 May.

If you play it smart, you get to roll your cash for nearly 2 months or about 2 pay cycles, which can be very useful. Usually, you get something like 20 days from date of issue of statement to the date payment is due. Play it right and you’d not have to pay anything for nearly 2 months. But make sure you pay it all off when the time comes, else you’d be hit like a ton of bricks with interest.

Told you it will take a while to think about! icon wink Money Tip: Dont be afraid of the credit card   Make it work for you! But once you get the hang of it, its quite easy to manage your statement and I find this useful for when I plan to make a big purchase. I have the cash ready, but having an extra 20 days to pay really helps! Plus I love being able to game the system icon wink Money Tip: Dont be afraid of the credit card   Make it work for you!

Do you have tips for making your credit card work for you? I’m still mostly a cash user and use my cards for larger transactions. Its still easier for me to control day to day spending using cash as opposed to a credit card and then fainting at the end of the month when I get the bill LOL! But when I do a large purchase, I plan wisely and try to maximise the benefits I can get from my card. My cards work for me – does yours? icon wink Money Tip: Dont be afraid of the credit card   Make it work for you!

Paris B

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[ 49 comments… read them below or join the discussion ]

Jyoan April 17, 2012 at 9:38 am

I still stick to debit card because I know I don’t have much self-control. LOL.

But my UOB debit card can earn points too, so I don’t find the need to switch to credit.

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Paris B April 17, 2012 at 5:24 pm

LOL! At least you’re honest with yourself :D I don’t mind the credit element because I do pay off my balance each month and its helpful to sometimes have some credit because I never know when I’d need the extra (and patch it up as I go) :)

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nia April 17, 2012 at 10:01 am

Good post!

I’m also currently having 2 credit cards as well, one master & one visa. Although the Gov says rm50 is nothing, but I don’t like getting penalize in order “to promote prudent spending”. So each time I get pushed into getting new credit cards with 1 year waive GST & free annual fee, I will cancel it at the 11th month and state the reason as GST – haha :P One bank which card I have recently cancelled even called me back saying they’re sending a replacement card and waive 1 year of GST & annual fee.

Another thing I always keep in mind is that my paycheck is always the credit limit. I never treat the credit card’s credit limit as something for me to fully utilize, or as easy money or as personal loan.

Most of my spending i will charge to my credit card for the points, which I later redeem for department store gift vouchers which I use to pay for my beauty indulges XD

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Paris B April 17, 2012 at 5:27 pm

Haha! I do the 1 Mastercard 1 Visa thing too! Just in case ;) I have to agree with you about the RM50 tax thing. When they announced and implemented it, I got rid of most of my credit cards. I just got rid of one more because the bank wouldn’t waive/offer rebates to off set the tax. No loss to me but loss to the bank :) I’ve started using points to redeem vouchers too! Makes so much more sense because I don’t need yet another household appliance.

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LeGeeque April 17, 2012 at 10:06 am

That’s exactly what i do as well. make massive purchase at the beginning of a bill cycle so i can push my cash to a high interest account to earn me some interest before i push it back out to pay the bill. all i can say is every little bit helps

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Paris B April 17, 2012 at 5:29 pm

I’ve been playing this shuttling game for so long, its now second nature! I love gaming the system :D

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xin April 17, 2012 at 10:18 am

excellent tips! especially the premier lounge treatment :P i had been using only one cc for years and recently applied another one because the card always fails me for god knows why :S

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Paris B April 17, 2012 at 5:30 pm

Haha yes! I don’t mind going early to the airport because I know I’ll have food, drink and internet ;) I recently had one of my cards fail me too at the cashier and I can’t understand why either! Thank goodness I have a backup else it would be quite embarrassing :P

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beetrice April 17, 2012 at 10:22 am

I used to have several cards to make use of all the promotional deals (back then Citibank and HSBC were all the rage), but have since limited myself to one in Malaysia. The only recent addition was a Sporean card since I realised the exchange rates weren’t doing me any favours.

The only thing I need to keep an eye on is the credit limit – I’ve had limit increases offered several times, and the bank always sounds incredulous when I reject it saying I don’t need it. Better still, they sometimes get sneaky and just automatically increase it without asking. Sheesh!

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Paris B April 17, 2012 at 5:31 pm

I think some of the SG cards offer very good deals. Based on what I see anyway. I don’t mind increases in credit limit because I don’t use it anyway. I only have X amount of income after all but sometimes a high credit limit is useful for throwing in the face of a bank that behaves badly :P

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ysk April 17, 2012 at 10:27 am

My mom had taught me exactly what you said.my parents had redeemed lots of free stuff eg fridge,tv,toaster..however people who are careless must make sure the card is not stolen or misplaced especially cards with high limits.my mom is quite forgetful and always misplaced her cards in the house and cars and we will be finding the card and worrying at the same time.this is one of the cons.

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Paris B April 17, 2012 at 5:33 pm

Ah that’s true. I am very careful with my credit cards although these days many banks have placed many security features now so I get a text message when I use one of my cards which is useful in case it ever gets lost and someone uses it :) The only fear I have is online shopping because for that you don’t need a signature and that’s very dangerous.

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ysk April 17, 2012 at 5:52 pm

But now I consider online shopping is quite safe too as they’ll send a code to your phone first before you can buy anything.I use my mom’s ambank master and they send TARC code to phone.same goes to my maybank debit visa.they also send MSOS code which is valid for 3minutes only.

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Paris B April 17, 2012 at 6:09 pm

Ah ok. I haven’t been using my card to shop online a lot lately so I might have missed out on the new online shopping features. I prefer using paypal :)

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ysk April 17, 2012 at 6:28 pm

I never use paypal,have no idea what is the benefit using it XD btw,can you tell me which bank offers premium lounge to cardholder??

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Paris B April 17, 2012 at 6:34 pm

I know Citibank Platinum cards offer this for limited times a year. CIMB Platinum too I think. There may be other bank cards but I’m not sure which. Eon & Hong Leong may have before this. Best to check the various banks’ websites.

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Sam April 17, 2012 at 10:53 am

In Australia, the credit card deals are not as good (usually only airline miles or reward points). I’d suggest doing your homework – look at the annual fee, think about how many points you’re likely to get and then compare. For example, are you paying $100 in credit card fees to get a ‘free’ magazine subscription worth $60?
I like no fee cards – the interest rate might be higher, but I don’t pay for the bank to let me have a piece of plastic. If you pay it off in full, you don’t need to worry.

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Paris B April 17, 2012 at 5:34 pm

Thanks for the insight into the credit card system in Australia, Sam! I wish we had no fee cards here. I am a bit paranoid about paying off my credit cards, so the banks make little to no money out of me. I think it frustrates them sometimes LOL!

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plue April 17, 2012 at 11:37 am

you so smart! i never really thought about the statement date thingy, so thank you for pointing this out :) now i am a bit knowledgeable on how to make CC work for me. thank you dearie!

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Paris B April 17, 2012 at 5:35 pm

Glad its of help :) I worked this out a while ago but it takes a little while for it to sink in. Once you get it though, its quite easy to monitor and helps me decide if I really need something too!

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Rainy Days & Lattes April 17, 2012 at 12:19 pm

I make my cards work for me as well :) I try and reap up ALL the rewards — cash back, hotel rewards, airline benefits, etc :D Great tips!

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Paris B April 17, 2012 at 5:36 pm

Teehee *high5* At least our cards work for us and not the other way around ;)

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Amex April 17, 2012 at 12:30 pm

I use my credit card mainly to get promotional benefits and collect points. I never use it to actually fund purchases as the credit card interest is ridiculously high, so I make it a point to always pay off the monthly balance.

Another benefit of using credit cards is for their 0% easy payment plans for larger purchases. Again, no loss if you make it a point to pay off the installments every month.

Also to collect as many points as I can, I utilise my card for payments wherever possible. To me, it’s as good as cash and I don’t have to carry around wads of notes in my wallet. As for controlling my expenditure, I find that it makes no difference if I use cash or a credit card. If I can’t afford something and don’t need it, I won’t buy it.

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Paris B April 17, 2012 at 5:39 pm

I had to chuckle because your handle is Amex and its apt for today’s topic :D I agree with not using the credit card to fund purchases. A lot of people don’t realize it but the interest on a credit card is one of the highest the bank may impose at any time and its scary! I always make use of the no-interest time period and “game the system” the best I can ;) Sounds like you have a good practice going on there! Way to go for no CC debt :D

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Stacey April 17, 2012 at 1:33 pm

I love milking the benefits offered by banks and credit cards for all their worth too! such as the airport lounges, travel insurances like what you have mentioned. I recently paid for my car’s downpayment with the Manhattan card and I received $200 cash back. It felt awesome!

I never let my rewards points expire, and will redeem it for dining and shopping vouchers. the feeling of choosing a beauty product from a departmental store and paying it off with a shopping voucher is great! :D

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Paris B April 17, 2012 at 5:43 pm

Woohoo! It sounds like you have it all down pat – kudos! :D I love the idea of cash back cards and of exchanging points for department store vouchers. I think its better than cluttering my house with more household appliances I don’t use :D

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Swati April 17, 2012 at 2:44 pm

control is so important!!! and, I do prefer to have credit card on my hand in case of an emergency or something. my tip is to avoid shopping on the credit card :D I always use net banking online because of which I can easily control the funds. I try to allot the budget monthly and stay in those limits. have been thinking of getting a separate account for beauty buys :D call me crazy but I do need some method to control it.

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Paris B April 17, 2012 at 5:46 pm

LOL! I don’t have a separate budget for my beauty buys but I can imagine it would be a great way to control spending :) Also I agree with you. The credit card isn’t evil and you just never know when it might come in handy (so long as one has the funds and can pay it off later). If I plan to do some shopping, I assign myself a limit and use the card to collect points etc but keep within my limit.

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Esther April 17, 2012 at 3:51 pm

Note to self: read more posts like this so you can manipulate your credit cards and banks when you get one! (20 this year) MUAHAHAH!!!!

oh and…thanks paris! I’ve always been scared about getting thems credits cards…just because….too many bad stories about it and good ones don’t seem that worth the trouble but….TO DELAY PAYS? Now that is interesting! :P

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Paris B April 17, 2012 at 5:51 pm

Haha! Yes! I teach you how to game the system ;) There’s no need to be afraid of the credit card. Its a useful convenience and all you really need is self control to know your financial limits :)

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Amanda April 17, 2012 at 3:57 pm

I’m using AMEX. Since it’s a charge card, I’ve to pay my bills every month by the paid by date or I won’t be able to used my card and they will charge me for late fees. I always use ‘Learn to read your statement and stretch your credit card payments’ tip too ;)

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Paris B April 17, 2012 at 6:01 pm

A friend of mine uses Amex too but I don’t know why it never appealed to me hehe… Locally there have been a lot of deals for the Amex credit card though so maybe its increasing in popularity :D

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synical April 17, 2012 at 4:07 pm

I’ve been reading about how not having a credit card means you don’t have a credit history, but I’m not sure if the concept of credit history is applicable to Malaysians.

Anyhow, an enlightening read. If I ever get around to getting a credit card, I think I’ll go for Mastercard because I already have several Visa cards in my wallet…

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Paris B April 17, 2012 at 6:03 pm

We do have the concept of credit history :) The banks will look up your credit history before approving bank loans. Just had to go through a credit check myself that’s why I know this hehe… But I don’t know if no credit history is a good thing as far as local banks are concerned. It might just mean for them that you don’t owe any other financial institutions and so, you may be a safer bet as opposed to one with a lot of owings.

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jen April 17, 2012 at 4:21 pm

This is so helpful! I don’t own a credit card but if I do I’ll definitely follow your tips! :)

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Paris B April 17, 2012 at 6:05 pm

Hope they’ll come in useful some day :)

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giddy tigress April 17, 2012 at 5:37 pm

I do the stretching the credit card payment trick all the time! Guys don’t really get it though. LOL

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Paris B April 17, 2012 at 6:07 pm

Haha really?! I thought it was so obvious but when I tried explaining it to someone they didn’t get it either :P

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giddy tigress April 17, 2012 at 7:11 pm

Ha yeah, I have been using it since I first got my credit card. Guess great minds think alike eh? :D

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lavender April 17, 2012 at 8:50 pm

I never plan my shopping that way. I just use it whenever I need to. Thanks for sharing.

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Paris B April 19, 2012 at 10:43 am

Thinking about the timeline helps you stretch your dollar – time wise if not value wise :) Also helps you think if you really want it ;)

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gio April 17, 2012 at 10:03 pm

These are very helpful tips! I only have a debit card and I put money into it only when I need to buy something, otherwise I’d spend way too much!

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Paris B April 19, 2012 at 10:46 am

That’s a good way to manage your money too :) Its nice to know we can all indulge in our activities and still be debt free :)

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Mira April 17, 2012 at 10:41 pm

I dont have credit cards because I’m not working yet. I just stick to debit card, since I have self-control issue. >.< Plus I need to save for my investment, so I can't spend more than I earn. ^^

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Paris B April 19, 2012 at 10:47 am

Good idea about saving :) None of us should spend more than we earn – some people tend to forget and think the credit card = free money when it isn’t.

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Shay April 18, 2012 at 6:15 am

I hardly take advantage of the credit card deals. Just because my Spendings are based on what I want and not where there is discount. I find it a chore to go through the promotional phamphlets that comes with the credit card.

So, I keep my frequent used cards down to 2. One is an Amex Krisflyer card. No lounge access but allows me to chock up quite a lot of miles. Another MasterCard I have is purely because some places don’t accept Amex.

I have HSBC and Citibank cards too as I can use them overseas to take advantage of card discounts if I ever chance upon them. And also to keep separate statements if I am on a work trip for subsequent claims. I don’t want to let my company’s admin staff see my personal expenses.

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Paris B April 19, 2012 at 10:50 am

Haha I don’t bother scanning all the pamphlets either. Usually its only if I happen to be in store and I see the sticker or something by the cashier. Or a friend mentions a discount. Or if I’m really free and have nothing to do, I scan the pamphlets before I bin them :P

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Sherry April 19, 2012 at 7:31 pm

So noisy here can’t read this post yet but I know is my dear credit card if pay early get penalty also

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YENE December 17, 2012 at 10:50 pm

I played with my master card, to gain my cash rebate and that’s it! :)

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