Even if you read your issuer’s documents or were walked through by an agent, your first credit card is always going to be a learning experience. Today’s cards are so packed with features that you can lose sight of the more important ways they will impact your life.
However, for most Philippine consumers, long-term issues are not always the first thing that come to mind when they file their first online credit card application. For most, credit cards are simply a convenient and secure way to make cashless payments and join the online economy, even when one’s cash flow is less than ideal. Indeed, the current upward trajectories of Philippine e-commerce and general retail are partly thanks to the wider domestic adoption of credit cards.
Regardless, it’s important to see how finally getting a credit card could impact your long-term finances. Simply having all these incredible benefits at your fingertips can change your spending habits and shield you from a range of negative scenarios. Expect these big changes to happen after you get your first taste of plastic:
1) Establishing a Credit History
To be clear, your credit card is not the only thing that helps peg you as a reliable borrower. However, because of the frequency with which cards are used, it’s generally one of the most relied-upon indicators used by issuers and other financial institutions to assess a borrower’s risk.
Using your first credit card responsibly helps identify you as a good borrower over time. A few years of good credit history invariably leads to better interest rates and loan approvals from legitimate lenders, providing you with more means to pay for whatever matters the most to you later in life.
2) Learning Financial Discipline
Credit cards make paying for things convenient. Some might even argue that they make things too convenient. Being disconnected from physical cash for the first time can make it harder to visualize just how much you’re spending. It’s no surprise that a lot of first-time card users rack up unexpectedly high billing statements after just a few months.
If you haven’t already been actively managing your finances, having a credit card will require you to do so. To avoid debt traps and other pitfalls, you must keep track of your spending, pay your bills on time, and stay within your credit limit. These are all very straightforward reminders, but you might be surprised at how tough it can be when you first get access to easy credit. The discipline you learn from managing your first credit card will most likely inform what financial tools are available to you well into the future.
3) Enjoying Perks and Rewards
The Philippine credit card market is currently quite saturated. More credit card providers are offering a range of perks and rewards that go beyond the typical cashback, travel points, and discounts. Depending on what your typical spending patterns are, using some of these cards may be cheaper than using cash while also opening up exclusive perks that would not be available otherwise.
One example of a card with rewards that you’ll get to enjoy everywhere you spend is the Landers Cashback Everywhere Credit Card by Maya. This dual credit card and membership card combo will allow you to reap up to 5% cashback on all the purchases you make in Landers Superstore branches, 2% cashback from any dining establishment, and 1% cashback wherever else you swipe.
With the right card, you might just find yourself saving more cash than you ever did. However, if you’re given to impulse purchases, these perks may also encourage you to spend more than you should. For that reason, most perks should just be viewed as that—perks. Thankfully, with time, you should be able to come up with your own approach to maximizing your card’s rewards.
4) Emergency Financial Backup
A credit card can serve as an emergency financial backup, giving you extra peace of mind even if you don’t use your card for frequent purchases. In unexpected situations where you need immediate funds, your credit card can provide a welcome source of financial support. Over time, your card will take the load off of your normal savings account, changing how you manage and secure your finances.
5) Developing a Positive Relationship with Financial Institutions
Lastly, as you demonstrate responsible credit card use, your credit limit and credit score may increase, giving you leverage when dealing with financial institutions. Whether you’re looking for a better deal on a loan, savings account, or investment funds to start a business, developing a better standing with your card issuer will open up new possibilities with other parties.
From First Credit Card to Financial Freedom
Though the Philippine market has traditionally been wary of credit cards, they are increasingly being seen as a smarter way to shop. Aside from granting the ability to buy online and space out payments for big-ticket purchases, many leading credit cards also offer rewards programs, cashback, travel points, and other benefits. It’s no wonder that more Filipinos are now filing credit card applications today than at any point in history.
If you’re one of those individuals, congratulations. Your first credit card is a significant step not just for buying more stuff online and offline, but also for building more resilient personal finances. Responsible use opens up a world of personal and professional possibilities and may even hone the financial sense you need to achieve your next level of prosperity. Pay your bills on time and stay within your credit limit, and you’ll see wonderful things happen to your financial future
