• Debt and Credit Cards: Your 5 Questions Answered

    Are you up to your ears in credit card debt? Experts teach you how to get out of it, now.
    by Justine Camacho-Tajonera .
  • credit card

    Many times it might seem that you’re working very hard… to pay your credit card bills. Financial experts tell you how to have control over your credit card.

    1. “When is it better to use my credit card than to use cash?
    ”According to Rose Fres Fausto, former investment banker, Philstar.com financial columnist, and mom of three, there are three instances when using a credit card is better than using cash:
    1. The card and cash prices are the same. Be careful when establishments say there’s no surcharge on the credit-card price. Ask if there is a cash discount. If the answer is yes, the establishment is just playing with words.
    2. When carrying a huge amount of cash is not deemed safe
    3. When you can invest the amount and earn from it (or “float”).

    Reynold Gan, unit head of RGAN Financial Planning Group (affiliated with Philamlife and Philam Asset Management Company), agrees with Fausto. “Credit card use offers convenience especially when buying major items such as appliances and booking online tickets. Cash is better when merchants offer big cash discounts.”

    Fausto cautions that only responsible spenders should use a credit card. “Cash is still better because of the psychology behind it: We feel the ‘pain’ more when we part with our cash than when we swipe our credit card.”

    Related story: 5 Money Mindsets that Keep you in Lack


    2. “How can I control impulse spending?
    ”Gan offers a great rule of thumb: “Use the two-week rule. Delay the purchase for two weeks. If, after two weeks, you still want to buy the item, then go ahead. However, make sure you have enough funds to pay the credit card balance. Never resort to the ‘bahala na’ mentality. Keep a handy record of your cash flow so you could easily check if you could fund a purchase.”

    “Don’t go to sale events—avoid them like the plague!” Fausto advises. “If you tend to spend beyond your means, use cash for your expenses. Once you’ve taken control of your spending habits, then you can entertain the idea of using that mighty plastic again.”

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