More Filipinos are applying for credit cards than ever before, a trend that’s as reflective of higher incomes and changing attitudes as it is of digital transformation. Indeed, credit cards are now widely seen as both a status symbol and a necessity for maximizing financial flexibility. Regardless, credit cards do come with risks and responsibilities, with many new cardholders struggling to stay on top of their bills. If the card permits cash advances, the challenge can become even greater.
A credit card cash advance is a useful feature of some exclusive cards that lets users withdraw physical cash from supported ATMs. VISA and MasterCard credit cards that offer this feature are especially popular with travelers, as they allow them to withdraw local currency from millions of ATMs worldwide. It’s easy to see how convenient this feature can be, particularly if you travel or if physical cash transactions comprise a very small part of your daily spending.
However, cash advances do have a few downsides. They typically demand much higher interest rates than normal card transactions as well as immediate upfront fees, making them an expensive way to get cash. Since getting a cash advance is as easy as putting your card in an ATM and entering your PIN, a lot of new cardholders use this feature without fully understanding the long-term financial impact.
Of course, this doesn’t mean that you should completely avoid cash advances. Even regular credit card bills can be an issue if you don’t understand your card’s terms and conditions. To ensure that a credit card like the Landers Cashback Everywhere Credit Card by Maya remains an asset rather than a burden, follow these practical bill payment tips in light of a cash advance:
1) Track Your Expenses Closely
Unlike instant debit card or e-wallet transactions, credit card purchases may take a few days to reflect on your banking app, particularly if large sums are involved. This discrepancy and the sheer convenience of credit cards means that new cardholders may have a distorted view of their spending.
If this is a problem for you, the best solution is to be extra mindful when you use your credit cards. Aside from just checking your app, consider logging your card purchases on a spreadsheet app or notebook so there is no question about how much you’ve spent. Make sure to log any cash advances separately to account for the fees and interest. Just this simple step will ensure you have fewer surprises when your bill arrives.
2) Set a Payment Schedule
Missing deadlines can lead to penalties and compounding interest, making it even harder to settle your balance. To avoid these problems, mark your due dates on your phone calendar and enable your card issuer’s SMS and email reminders to avoid late payments. Consider setting up a phone reminder on the payday before the end of your billing cycle so that you can immediately pay off your card.
3) Avoid Relying on Cash Advances
Because of how useful they are, you would much rather have a credit card that offers cash advances than one that doesn’t. That said, the high fees mean you should only use cash advances as a last resort. Whenever you can, opt to pay with a debit card, negotiate the transaction, or take out a personal loan before you take out an advance.
4) Always Pay More Than the Minimum
Paying the minimum amount on your card bill does prevent late fees. However, it also keeps you in debt for longer, which is probably not a good idea if you want to maintain a good credit score. Whenever you have cash, pay more than the minimum to clear your debt faster.
5) Use the Snowball or Avalanche Method When Managing Multiple Debts
Things will get hectic if you have debt on multiple credit cards. When that happens, make your repayments more manageable with either the avalanche method or the snowball method.
With the avalanche method, you’ll be able to focus on paying off the debts with the highest interest rates first, thus minimizing your total interest. The snowball method focuses on paying off the smallest debts first, creating a psychological boost and more momentum for paying off the bigger debts.
6) Recategorize Your Credit Card Bills as Fixed Expenses
If you make regular credit card payments, you’ll want to dedicate a set portion of your regular income as well as any cash windfalls for these expenses. Treating your credit card payments as a fixed expense rather than a variable that you can pay at any time can prevent overspending on less essential areas.
7) Negotiate with Your Card Issuer
If, after several months, you’re still having trouble making your credit card payments, reach out to your card issuer. Many financial institutions are willing to offer restructuring options or payment extensions to responsible customers who have legitimate financial challenges. If you have multiple debts, you may also ask your issuers if debt consolidation is an option.
To be clear, negotiating your debts will likely result in a hit to your credit history. However, this is preferable to being in constant debt because of a few mistakes when using your credit card.
Avoid Credit Card Woes—Partner with a Better Digital Bank
Smarter payment plans can only do so much if your issuer has excessive fees or difficult-to-navigate processes. The best move you can make is to switch to a provider that offers better terms and a simple, yet powerful mobile banking app.
In the Philippines, emerging digital banks are great choices for your first credit card, thanks to their generous terms and user-centric fund management tools. With the right banking partner, managing your credit card wisely doesn’t have to be a struggle.
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