My Credit Card Story

Credit cards are probably one of the reasons why many Filipinos are miserably in debt.

I actually have some friends who consider credit cards as “evil” and swear that they will never, ever get one.

Do you feel the same way?

Personally, I consider credit cards as one of the best tools for leveraging money – but if and only if, you have the financial discipline.

So what’s the right way to use a credit card?

Let our guest blogger for today, Carlos, tell you, through his credit card story below.


About seven years ago, I really didn’t like credit cards. I had a lot of reservations about having one; which other people shared. Instead of cutting you off when you go over your credit limit, they just increase the limit. And when you can’t pay on time, they charge usurious interests and fees. But the biggest factor for me was I saw first-hand how you can get harassed by collectors when you couldn’t pay on time.

I definitely did not want any part of that, and resolved to never get a credit card. (Though it somehow escaped my attention that my dad had not one but two credit cards and was never getting harassed nor suffering any of those other drawbacks.)

But that changed when one day an agent somehow managed to get into our office. He offered a credit card. And as is common, there’s a “reward” just for signing up. But instead of free coffee, the reward was a sign pen. And a sling bag. And a trolley bag. Plus the usual waiving of the annual fee for the first year.

So of course, I and my office mates got to thinking. I sign up, cancel within the first year, and then keep the free stuff. So I and an office mate signed up for one.

I eventually got my credit card. But days after that, the free stuff still didn’t arrive. My office mate took the initiative and called the credit card company. That’s when we found out that the free stuff wasn’t really true. The agent lied just to close the sale. (I should’ve known it was too good to be true, right?)

We ended up keeping the credit card anyway, just in case it could become useful (after all, the first year was free). I never used it for the first year. In fact, I rarely saw it that first year that I forgot to have it cancelled. Already in my second year, I decided to keep it since I was going to be paying an annual fee anyway.

At that point I figured I should use it, again because I was paying for it anyway. So I started using it for groceries.


And that’s when I realized something. I wasn’t being over-charged; there were neither interest nor additional fees. No one was calling me up at odd hours, pressuring me to pay. And my credit limit wasn’t magically getting higher either. With the things I feared not happening, I got more comfortable with using my credit card. I learned that if I spent wisely, it was actually a convenient thing to have.

And when I wanted to buy my dream phone, I used my credit card to pay for it. I was careful to check that I could afford the monthly installment. But a few months after getting my phone, with the I-have-a-new-toy feeling wearing off, I was still paying the monthly installment. And it was money I felt was basically being thrown away since I wasn’t getting anything more for that payment. Sure I had my phone, but my giddiness for it had worn out. All I was left with was a bill I could comfortably pay, but consistently eating up my monthly budget.

After that I resolved never to buy anything on installment again. I’d save up first and then buy.

So after a few years and I wanted to buy a smartphone, I saved up for several months, and allocated a portion of my 13th month pay for it. And since I wasn’t paying by installment, I ended up paying less overall (it didn’t have a 0% installment plan).


And that’s when I really felt my credit card was an advantage. I could use it to buy high-priced (but within my budget) items instead of withdrawing and then carrying a large amount of money – and suffering the usual anxiety about getting robbed or misplacing the money.

And I could even pay it online, thereby avoiding the long lines at the ATM.

In fact that’s what I do now. Once a week I withdraw a small amount, just enough money for fare and lunch money. All the rest of my expenses are paid through my credit card. And to make sure I spend wisely, I pay it online right away – within the same day, sometimes just hours after the purchase. I’m never afraid of getting robbed, since even right after withdrawing there’s just a small amount of money in my wallet.

And the best part? I get rewards points. Before, I was accumulating miles for airfare. Now, I’m thinking of switching to a card that gives rebates on grocery purchases (one gives 3% rebate for any store, the other 5% for one particular store). I estimate that by doing so I could save as much as 5,000 pesos by the end of the year.

And 5,000 pesos is actually enough money to invest in a mutual fund or UITF. So instead of not using and even being afraid of my credit card, it can now actually help me save and prepare for my future.

This guest post is contributed by Carlos, an IT professional and newbie investor currently dreaming of being an entrepreneur. You can visit his blog entitled, The Personal Finance Apprentice.

Having a credit card can be a good thing – and if you want to train yourself on how to properly use one, just do this simple tip:

Every time you use your credit card, take out the exact amount from your bank account and put it inside an envelope. So if you swiped P1,000 on your card, then as soon as you can, but not more than 24 hours later – withdraw P1,000 from your ATM and keep that money in an envelope.

When the credit card bill comes, take out the money in the envelope and use all the money you “saved” there to pay your entire due amount.

That’s actually how I trained myself to use a credit card, and if it worked for me, I know it will work for you.

Read more articles about credit cards, check out: All About Credit Cards

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Photo credits: 401K 2013 and Images of Money


  1. Credit card is neutral just lie a gun. It depends on how you use it.Abuse it and definitely it will be your number one enemy. Credit card is a good tool. he ones who complain are the ones who abused it

  2. Yes, owning a credit card requires a lot of discipline and patience. If used wisely you’ll get free foods, items, earn points that can be exchanged for miles, and help you track your expenses.

    Instead of putting the intended money for your purchases in an envelope, just pay it Immediately if you’re enrolled in online banking.

    I had our meralco bill Auto-debited using the credit card and was able to avail of meralco’s benefits of rebate when paying on time. saved almost 7k.

  3. Thanks for featuring my story, Fitz!

    @Mercid… if people do what Fitz (put it in an envelope) or I (pay online) do, they’ll develop it pretty fast 😀

  4. Sir,

    How can you save if you’re paying an annual fee on the succeeding years? How to negate this kind of fee or charge? Please enlighten me on this area.

  5. Nice story Carlos. I do have my own credit card story as well. Some additional tips you can consider:
    1. Never exceed your income when you use your credit card unless you’ve saved some money for the purchase and can pay for it.
    2. Pay the whole amount due monthly.
    3. Shred your credit card PIN for cash withdrawals as the interest is higher than personal loans from the bank.

  6. Greetings Mr. Fitz:

    Regarding Credit cards, which card would you suggest?
    – I intend to use it only on-line transactions.
    – minimal usage only, perhaps once a monthly only.
    – only if i run-out of cash during international travel.

    Regarding ATMs in the Philippines:
    – can it be used to pay over the counter “via swipe just like swiping a credit card”, when i was in Kuwait the bank issued me an ATM w/c i can use to pay via “swipe” and the amount will be deducted from my bank account with out any charge, Is this system available in Philippines ?

    Regarding UITFs or Stocks:
    – since I’m a newbie and in the process of building up my units or shares, is it ok to just buy regardless if the price is still high, until I reached my desired quantity of units or shares ?
    – OR just buy minimal as a start up and wait when prices go down then buy a lot ?

    Thank you and God Bless.


  7. Another good thing about credit cards is that you have a virtual secretary for free (the credit card company) who gives you a monthly summary of what you have spent.

    Use ADA facility of the bank to pay the bills for convenience.

    You can also negotiate the annual dues.

    FYI, credit card companies earn even if you are not charged because the participating merchants give 3%-5% commission for every item you charged with.

  8. @Bro Effem
    If you’re a good payer, you can actually ask the credit card company to waive the annual fees, it’s very rare that they’ll refuse. I have two credit cards and I’ve never ever paid an annual fee with them.

    I’m not a “platinum” member or any of those “special” account types, I just have an ordinary credit card.

    Apply for a credit card where you also have a bank account. Easier to get approved and it will be convenient for you to pay it.

    Yes, you’re talking about a “debit card”. All banks that offer VISA credit cards in the Philippines also offer debit card options.

    I’m assuming that you’re cost averaging… if so, decide on a fixed amount that’s not too high, and the frequency at which you’ll buy. Then just invest until you reach your investment objective. Never mind the price, just be sure that you invest the exact same amount that you started with, and do it regularly.

    To cost average, you cannot change the amount you’re investing, so it’s better to start with an amount that’s small and manageable.

    Thanks everyone who also shared their own tips on how to be a smart credit card user. 😀

  9. I have four credit cards and I pay all bills in full and on time as a result I don’t really pay annual fees. I also availed of cards with rebates so its nice to see that I get about 1500 per month as rebates which is like investing more than a million pesos in time deposit without any capital. And I was only spending for my needs mostly. I also leverage on some balance transfer offers at 0.60% or 0.45% when I buy appliances as the discount I get from paying cash or straight is normally double than the interest expense on the balance transfer. For one of my cards, I have already received almost P30k on rebates in less than two years which is similar to what I would earn from investing in a long term time deposit at 5.5% per annum.

  10. Yes, I do agree that a credit card can be a good thing. The important thing is to know how to use it responsibly.

    Personally, since I budget my earnings before spending, I make use of the envelope system to help me stay in line with my credit card usage. I have certain amounts allocated to paying the monthly installments, membership fees, and utility bills paid via CC. I also allocate a budget for our groceries that month and for any miscellaneous expenses (such as dine-out, deliveries, clothes, books, etc.).

    Although gotta admit that I’m still working on staying within my budget for the groceries and misc. expenses…Lol…But yeah, the good thing is because I have a budget and keep track of my expenses, I can see and evaluate my expenses and it helps me to be more conscious of how I spend using my credit card so that the following month, I will think twice before spending, spend less, and work harder to stay within my budget. =)

  11. I’m too afraid to get one. I’m comfortable paying in cash. I might used it unwisely if I have one just like my brother. He’s so kuripot before but when he received his first credit card he purchased anything that he wants (not need but wants) without thinking that his debts are filing up.

    One time he changed his billing address because the billing statements are sent to his workplace before. Then, he didn’t received any billing statements for I think 2 months or so, therefore, he just pay the minimum amount and that I think is allowed right? Then the collector called, pretending to be an attorney, and my mom was the one who got the call and she was brutally harassed to the point that she was crying after the call…He said so many things, he threatened my mom and forced her to pay all my brothers debts. Very bad experience with that bank. I won’t mention it…If ever I want to get a CC I won’t apply to them, EVER!

    BTW…the article is great…I’ve learned something from the author that I might consider getting one..:) Cheers!

  12. I am an expat here in Qatar. I also had a terrible experience with credit cards when I was in the UAE. I was CC less for 4 years, then I got one last year. But here is the catch, there is an option with my bank, that if you deposited 4500 (around 50k Php) Qatari Riyal they will give you a credit card with a 4000(44k Php) Qatari Riyal Credit for the rest of your life for free. There is one catch though, there is a termination fee of 300 QR (3300 Php).
    If I use this card on a particular store I get 5% SOMETIMES 10% rebate and 1% on other store. I estimate to using aroung 6000 QR already on that card and it has around 380(4000 Php) rebate amount already. Compare that to the SM advantage card where we used it for a year and got 600 pesos in reward money.
    I only use this card when shopping,and it has already paid for its termination fee for just three months. I don’t even have to worry about overspending since I deposited money on it which I consider part of my emergency fund.
    Its really a debit card but with Credit card functionality and rewards.

  13. Hi Fitz, Carlos,

    I agree with the article but in some cases, people are forced to use their credit card in financial emergency situation like losing a job or source of income.

    Credit cards are initially designed to buy our “wants.” Later, it evolved into being capable of buying our “needs.”

    When credit cards are used to buy our “needs,” that is when it becomes a bigger problem than when we use it to buy our “wants.” Because “wants” can be delayed while “needs” are our basic necessities like food, medicines, education.


  14. I had the same reluctance about credit card as Carlos years ago. I also got the resolve not to get a credit card. When BPI offered me a pre-approved credit card, I declined it. They were trying to deliver the card at home, but I told the messenger that I did not apply for it.

    Then a little more then a year later, another credit card offer, still from BPI, came. I accepted and it was the start of due diligence and discipline in planning my expenses and making sure I pay on time.

    I can attest to the convenience a credit card brings – purchasing appliances, gadgets, online deals/bookings, etc. No ATM or bank queuing required.

    When I was being charged the annual fee, I cancelled the card. Few months after, BPI offered me a new one. I accepted on the condition that the annual fee would be waived. I now have another “free” credit card.

  15. Personally I think that Credit Card is a bad idea. In the U.S., statistics from Consumer Reports shows that 78% of all airline miles are never redeemed (since nabanggit kanina about airline miles). Ang ibig sabihin, madalas, people end up with no plane trip and a bunch of debt.

    OK nmn ang pagpunta at pagbabakasyon sa ibat ibang lugar, at bumili ng mga gadgets and other cool stuff (I’m a gadget guy myself and my wife loves to travel), pero it’s really not cool to be in so much debt.

    The best pa rin sa pananaw ko ang mag save and pay cash for trips and other big or small purchases (with maybe the exception of buying a house). And If you do not have cash, that means you cannot afford it.

    Personally, what me and my wife do is we have emergency fund (which is strickly for emergency) at meron kme item sa budget namin na tinatawag naming “waldas” fund (Each month nag mi-meeting kme ng wife ko at nilalatag ang budget and we both agree to it). I think my wife’s favorite fund is yung “waldas” fund. That is purely for things na gusto naming bilhin like gadgets and and other stuff na di nmn tlaga kailangan pra kme mabuhay, so we can buy them guilt free. Kung uuwi kmi ng pinas (since mga OFWs kme) or gusto naming magbakasyon, we have a “sinking fund” or in other words “alkancia” na hinuhulog namin in a different bank account and so we save for plane tickets and hotel accomodation, etc. So all our trips are planned well in advance (salamat naman sa mga airline promos at piso fare). Since we do not have credit card, we pay CASH for everything or we use our debit card to pay for our flight tickets and book hotels.

    Tsaka wla pa akong nakitang yumaman dahil sa credit card points so I really think it’s not necessary especially kung may “emergency fund” ka na at pinag iipunan mo ang mga bagay bagay and pay everything in cash. Again, personally I really think it’s a bad idea to use Credit Card and we stay away from them. I don’t really think the Banks are not that stupid to lend us money and give us “points” and other “perks” for NOTHING. No, not at all. They have watch our consumer habits. They’re business is to make money and not to loose money. Hindi sila N.G.O. or non profit organization (just in case your wondering), they exists for the purpose of making money and have gigantic profits pra ipamudmod sa kanilang mga shareholders. And kanino sila kikita? You guess kung kanino…

  16. I have a prepaid “credit card”. It’s a BPI My ePrepaid MasterCard. So I just reload its balance from my savings account (which I can do online), and I can use it anywhere a MasterCard is accepted, including online. The only thing is that it has a balance limit of Php 10,000, but I actually view that as a security measure– in case it gets stolen or anything, I can’t lose any more than that. There was a sign-up fee of Php 500 and then no other fees after that. 🙂

  17. @afilipino,
    How were you able to get a rebate from Meralco? For 10 years, I’ve been paying my 5 Meralco bills via Citibanks OneBill facility, so it’s paid on time always.
    I use my credit card for all our expenses (supermarket, school tuition fees, utilities, air fare, shopping – all pain full on time)… about 2yrs ago, CB had this promo to change your total reward points to change for SM gift checks, I got about P24k in total gift checks, if ever they will bring back this promo, I already have about P7k in total ready to claim, can’t wait for that promo to be back.

  18. I’m not really sure why my post was not recognize here. tried posting here but 3 times my post did not get in

  19. Hi Jonathan. I was able to salvage your comment in the spam section. Thanks for the notice. I think it’s an issue with my spam filter. I’ll look more into it.

  20. Credit Cards are not bad, It is the user who is a good user or not. Credit card brings convenience to shopper. Always make sure that when you use credit card, you have ready cash to pay for the purchase.
    Annual fees can be waived. If not , cancel it. There are many credit cards being offered for free…

  21. Hi Fitz,

    how to close credit card in good standing and no outstanding balance without hurting my credit score. thanks!

  22. Hi pearl. Just tell the bank that you want to close it.

    They will give you offers (such as waived annual fees) to convince you to keep the card – but just say no. Whatever you do will not affect your credit score.

    The only way to hurt your credit score is to fail to pay your debt. So no worries in closing a card with good standing.

  23. I agree that when we use our credit card responsibly, it can be an advantage. In my experience, I got AED 1,150 (P13,000+) worth of vouchers from Barclays. I used these vouchers to buy pasalubongs. I converted some to cash by selling the vouchers to friends. 🙂 I make sure that there’s no annual fee because I hate paying one.
    I believe credit cards are only for disciplined and responsible people who have the right financial mindset. Otherwise, the same card can ruin us tremendously.

  24. Awesome article which brings about a very intelligent discussion on financial responsibility, advantages and disadvantages of credit card. Good job to the writer!

    I myself have been a credit card user for almost 6 years now, and I find the article extremely informative for those planning to get their first credit card. Personally, if you get a credit card, just spend within less than your means – do not spend within your means. (Para may matira pa for savings and other stuff)

    Comment section is likewise helpful. I especially like the comment of Jonathan Mondejar on having separate funds for each expenses.

    I also hate installment purchases, and rarely use it, unless there is a needed big purchase (urgently needed appliances such as ref, washing machine, NEVER TVs or phones, since cash purchases are generally cheaper)

    One tip I can add to this discussion is when you’re looking to buy a gadget and is deciding whether to use a credit card, try to ask around other stores selling the same item. Most stores would sell cheaper if paid through cash.

    I only suggest to use the credit card (installment or straight charge) is when the computed amount of rewards that you would be getting if you used a credit card would be almost the same as the cash price, or when all stores sell the gadget at the same price regardless whether cash or straight credit card purchase. This way, you are able to maximize the use of your credit card.

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