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12 Biggest Credit Card Mistakes Filipinos Usually Do

Credit Card Mistakes Updated on April 2024 

Credit cards were designed for shoppers’ convenience—or so they are advertised. However, you might make many credit card mistakes if you are unaware of their proper use. 

About two percent of households have credit cards. This seems minuscule compared to the number of credit card holders in our neighboring countries, such as Singapore, South Korea, and Japan. A typical Filipino would avoid credit cards with too many credit card debt stories in the Philippines.

Additionally, credit cards are synonymous with uncontrolled spending. The plain truth is these thin plastic cards carry a lot of risks. A bit of overspending can turn your finances into chaos.

I admit. I now have a couple of credit cards too, but I still need to be 100% comfortable using them. A minor misuse can send me into snowballing debts. Unfortunately, I need to use a credit card to help with my credit score and have additional proof of billings when required.

So, I will share the top 10 credit card mistakes Filipinos make that have caused them serious financial dilemmas.

credit card mistakes


Top 12 Biggest Filipino Credit Card Mistakes

Filipinos slowly opened up to the power of using credit cards instead of cash. With these plastic cards, any kind of spending is possible. You can make offline and online purchases and secure flight bookings and accommodation. 

However, there’s always a downfall you should watch out for. Swiping or tapping your credit cards anytime and anywhere has some consequences. 

I listed some of the most common credit card mistakes I experienced. Some of these are from my family and friends who shared the same dilemma. 

1. Taking a cash advance

Did you know you can withdraw cash from an ATM using your credit card? If not, now you do. 

A cash advance is a credit card feature that lets you withdraw cash from an ATM. While it sounds like instant money, you must only use it in an emergency.

No matter how the banks make it sound too inviting, cash advance comes with fees and other charges. And these rates are no joke. 

The credit card cash advance novelty has no grace period. Issuers charge daily interest starting when you withdraw your money from an ATM.

If you are not careful, this can quickly become one of the credit card debt stories in the Philippines. That’s because the longer it takes to settle your balance, the more you pay.

What to do: 

Avoid cash advances at all costs. Their interest rate is different from the effective interest rate. Find another way to have cash, such as getting a personal loan.

2. Paying the minimum amount

You will receive your credit card bill every month stating that you can pay even the minimum amount. There is no need to pay off the entire amount charged to your credit card. It sounds inviting to pay only a small value rather than the entire amount, but there’s a reason behind that. 

Most of the time, banks only charge interest on your credit card if you fail to pay your bill on time. Even if the bank keeps telling you that repaying a minimum amount is okay, it is not. It is one of their strategic marketing to earn from you. 

Banks fail to inform you that the remaining balance from your bill is still charged with the interest. This way, you must pay more on your next credit card bill, which the bank earns from you. If you comply with this, you’ll be committing credit card mistakes. 

What to do: 

Always pay the bill in full. This will avoid the late payment fee and the interest charge. 

credit card mistakes - missing the due dates

3. Missing the due date

Another critical detail in your credit card bill is the due date. Never miss your payment date, or else you’ll regret being forgetful. 

You’ll accrue interest for every day you miss paying your bills and incur a late payment penalty. This means you have another fee to settle on top of your credit card monthly due and interest. 

You may have many due dates to remember for utility bills and tuition fees, but credit card bills are equally important. It helps you pay off unexpected bills and buy groceries when your next paycheck is still not around the corner. You could ruin your credit history if you are careless and commit this credit card mistake.

What to do: 

Keep track of your due dates. Use a calendar or log-in reminder on your phone. If you keep thinking there is still a long time before the due date, you might use the money for other things. It is better to pay ahead if you can.

4. Using a credit card as free money

There is no such thing as a free lunch with credit cards. Credit cards allow the bank to pay for your purchases first, but you will have to pay the amount later. 

With credit cards, there is only an interest charge if the bill is settled. Failure to pay it off means extra fees for you. 

These plastic cards represent instant loans. You may not pay with tangible cash, but you can still buy products and services. That’s why you must understand how your bank and credit card work. Otherwise, you will soon be swimming in debt. 

What to do: 

Purchase only what you can afford. Balance your budget carefully to ensure your bill will be paid by its due date. Remember, you use your credit card to purchase essentials, not to create a swirling debt. 

5. Shopping abroad with a credit card

One of the perks of having a credit card in your wallet is that it works during overseas travel. You can spend on any item you like buying or making reservations using a plastic card. 

However, many Filipinos need to pay more attention to the crucial details that lead to credit card mistakes. Credit cards have foreign currency transaction fees of 1.75% to 2.50% on purchased items. Unless your credit card has a dual currency feature, it is not smart to use it abroad.

Here’s a scenario: You visited South Korea and purchased something. Your credit card was charged in Won. Do not expect your purchase to convert directly to pesos. 

All foreign credit card transactions are converted to US dollars first. Afterward, it is converted to become pesos. Then, your credit card issuers will also top up the total amount with service charges. A single overseas credit card spending takes several processes before it reflects on your next bill. 

What to do: 

Use your credit card only for emergency purchases or leave it at home. Yes, using your credit cards during travel is very handy. However, it is hard to estimate how much you will eventually pay, so it is better to keep your finances safe.

6. Maxing out your credit limit

Banks offer various credit card limit Philippines. This is a safety net for the bank and the credit card holder, but it still depends on their own discretion. 

The credit card limit is the highest amount you can spend using your credit card. However, it does not mean you always have to max out the value every now and then.

Usually, transactions do not go through if the highest credit limit Philippines has been reached. On the other hand, in some cases, the transactions are accepted. But these instances come with a price of an over-limit fee of Php500. 

Not minding your credit limit is one of the biggest credit card mistakes you shouldn’t commit. It shows how irresponsible you are when it comes to your financial management. 

What to do: 

Keep track of your purchases to know how much is left on your credit limit. As much as possible, only make purchases up to 50% of your monthly credit limit. This way, even with emergency purchases, you will stay within the highest credit card limit in the Philippines.

sales and promos lead to credit card mistakes

7. Always eyeing promos and discounts

The BIG SALE signs often attract Filipino shoppers. They buy in bulk just to make the promo worth it.

Credit cards offer a myriad of promos and discounts, which make for perfect eye candy for shoppers. You will stop and turn to see if you can take advantage of the promo. 

However, each promo has terms and conditions that must be met. There’s more than the flashing red signage of sale. If you just focus on discounts, freebies, and promos, you might spend more than you should. Worse, you make unnecessary purchases just to secure the bag of discounts. 

What to do: 

Before purchasing, validate if it is a need you can pay or just a want that is over the budget. Everything you spend using your credit card needs careful evaluation. 

8. Paying the annual fee

Most credit cards have an annual fee, the amount of which depends on the category. Some credit cards don’t have annual fees for life. But others don’t. That’s why it is best that you talk to your bank or credit card issuer about it. 

The fine print often states the annual fee. If you read and understand about it, you can learn how much you must pay. In addition, you can set your expectations about it. 

Often, credit card issuers charge the fee one year after the credit card is activated. You don’t have to worry about any annual fee for the first year, but you must allocate a budget for it in the succeeding years. 

What to do: 

Ask the bank how you can waive the fee. Most banks waive the first annual fee, while others waive it in exchange for a certain number of accumulated reward points.

9. Charging medical bills

Medical bills can increase quickly, even just for a day of confinement in an emergency room. What’s more, if you stay in the hospital for three days? But do you know what is worse? Using your credit cards to settle your hospital bills.  

Medical bills can blow up your expenses when you use your credit cards. It has steep credit card interest rates of up to 42% annually. While the hospital bills get bigger, the balance on your credit card also multiplies. Your debt will be an avalanche in no time.

Just as they say, “Health is wealth,” your credit card mistakes can take it to another level. Spending your credit card for hospitalization equates to a different computation. 

What to do: 

Find other ways to pay your medical bills. You can use your PhilHealth benefits, get a personal loan from legitimate moneylenders, and negotiate with the hospital.


10. Having too many credit cards

Some Filipinos flaunt their credit cards because they can purchase anything anytime. But it is not something you have to be proud of. 

Every plastic card in your wallet is equivalent to another responsibility. You must note every purchase, credit limit, statement date, and due date of every credit card. You must track four of these vital details every month if you have four or more. 

You might miss these crucial details if you have too many credit cards to consider. Once you forget them, you might incur penalties and other charges. Worse, you might borrow money from others just to pay your dues. 

What to do: 

Keep one to three credit cards according to your financial capacity and needs. Analyze your spending habits. If you think your spending behavior is difficult to control, having a credit card can put you at financial risk. 

11. Cancelling credit cards

Paying credit card debt is challenging if you face financial problems. But once you accomplish it, it is an achievement you shouldn’t miss. 

However, many Filipinos think that once they finish their credit card obligations, they must cancel that card immediately. But in reality, doing so won’t favor your credit score. Instead, it could even hurt your score, making it challenging to apply for loans or credit in the future.

Your credit score requires a long history of good credit behavior. That’s why when you cancel a card, you mess with that good track.

If you have two credit cards, one you had for 5 years and another for 2 years. Your average age of credit history is 3.5 years. But what if you choose to ditch the 5-year-old card? Your average drops to just 2 years, and that’s a problem.

So, unless a card’s annual fee is sky-high, it’s usually best to hang onto those older cards. Keep ’em active, and your credit score will thank you!

What to do: 

Keep the credit card active. Continue using your older credit card occasionally to keep it active. Make small purchases and pay them off on time to demonstrate responsible credit usage. 

12. Applying for the wrong credit card. 

Picking the most suitable credit card can help you avoid credit card mistakes. I learned that there are various types of credit cards available. Here are the four options that you need to choose wisely:

Interest-free cards offer a promotional period during which you won’t be charged interest on purchases or balance transfers. It is an excellent choice if you plan a big purchase without accruing interest for a set period.

Low-rate cards have a lower interest rate and are ideal for carrying a balance from month to month. You’ll pay less interest over time compared to cards with higher rates.

Low-fee cards have minimal annual fees and other charges. If you want to keep costs down and don’t need fancy perks, a low-fee card might be the way to go.

Rewards cards offer points, miles, or cash back on your purchases. If you think you can pay off your balance in full monthly and earn rewards from spending, an awards card can be a rewarding choice.

What to do: 

Before committing to a card, assess your spending habits, financial goals, and what you value most in a credit card. Shop around, read the fine print, and consider factors like interest rates, fees, rewards, and additional perks. This way, you can decide which credit card aligns with your needs. As a result, you can make the most of your credit card experience while avoiding mistakes. 

Credit card mistakes are sometimes inevitable. But if you develop self-awareness, you can overcome them. Follow the tips above, and don’t become a victim of your powerful plastic card. 

What’s Take Away with Credit Card Mistakes?

Credit cards are useful, but simple mistakes can easily lead to long-term financial disasters. Read the fine print and understand each. If you have queries, ask away to authorized personnel. 

Also, know your alternatives. There are more options than you can think of. You can get an online personal loan from Cash Mart if you need cash on tap. 

Cash Mart offers flexible loan terms that you can use to fit your financial needs. Plus, it saves you from making credit card mistakes.