It’s pretty convenient to use your credit card for purchases since aside from technically deferring payment until the next cut-off and giving you ample time to save up for it, there’s no physical money-out. This then can trick you into thinking that you’re not really spending anything—and that’s where it becomes problematic.
If you’re not too keen on keeping tabs with your credit purchases, your next billing statement may shock and cause you to pay more than what you can actually shell out. To help keep your swiping habit to a minimum, it's best to pay in cash, especially during these instances:
1. When your transaction isn’t that huge
If you’re just buying something for less than P500, it’s wiser to spend cash for it. Small purchases accumulate, and if you keep on using your credit card for them, there’s a huge possibility that you’ll go beyond your budget. And even if you’re only charging one small purchase to your card, there’s always that possibility that you’ll forget to pay your statement on the due date, which will earn you late charges that may even cost more than your initial purchase—that would be very frustrating.
2. When you’re using ride-sharing services
If you book a Grab or an Uber for your daily commute, pay in cash as you would a regular cab. Treat it as part of your weekly expenditures and allot a part of your budget for it. Unless you’re using these services for an expensive, once-in-a-while trip, don’t let your credit card debt bloat because of something that you could have easily paid off at the onset.
3. When eating at cafes or restaurants
Paying for an expensive hotel buffet for your family is one thing, but your usual coffee-and-pastry run at Starbucks is another. Similar to ride-sharing services, it’s a good decision to use cash for regular meals because they don’t often cost too much to warrant a swipe.
4. When purchasing at craft fairs featuring small businesses
While some small-to-medium enterprises that participate in weekend community fairs now offer credit card payments, paying in cash at these venues is still better for you and the person you’re buying from. Aside from the store immediately getting money from your purchase, you’ll also get the opportunity to haggle—something that’s hard to do when using your card.
5. When buying things abroad
Take out your card abroad only when you’re really, really hard-pressed for cash or you’ve got a card that has no foreign transaction fees. Foreign transaction fees, which usually amount to 2% to 5% of your international purchases may cause you to pay more than what’s on the price tag, which of course, you’ll only find out when your credit card statement arrives. If you wish to swipe abroad, try calling your bank before you leave and ask if your card requires you to pay foreign transaction fees. If it does, opt to pay in cash, have an extra stash for emergencies, and stick to your budget.