Credit card debt deters many Filipinos from owning a credit card in the Philippines. The truth is that many cardholders do not incur debt and instead benefits such as greater financial freedom, rebates, and rewards. Debt does not go hand in hand with having a credit card. There are tons of benefits of using a credit card even in purchasing a home. Understanding how credit card debt works allows you to effectively manage your debt and plan out your monthly payments so that you don’t accumulate any outstanding debt.
For whatever type of purchase, cash is the most commonly used payment method. Some of us also use checks to make transactions. You would, however, need to create a checking account at a bank and maintain a deposit balance for it, as well as ensure that you have more than enough funds every time you issue a check for payment. Otherwise, you will have an overdraft, which will harm your credit rating. There is also a three-day clearing wait for checks before a credit is issued. Furthermore, not all banks allow you to open a checking account right away. Before you open a checking account, you must have been a customer of a bank for a long time. So, it is more advantageous to utilize credit cards as mode of payment even with home purchases.
Buying a house with a credit card seems hard, doesn’t it? It isn’t. You could borrow the money on your credit card and buy the house outright if you have enough credit to afford the expense. However, while you may be able to pull it off in certain circumstances, we strongly advise against it.
As a credit cardholder, here are the advantages of using credit cards for your home purchase.
As a Credit Cardholder, you are Legally Protected by Law
Did you know that there is a law in the Philippines that protects credit card holders from abusive collection practices? One of the benefits of a credit card over other payment methods is the Philippine Credit Card Industry Regulation Law (Republic Act 10870). In purchasing a home, it would mean a paying huge amount of money in intervals. In line with this, the Bangko Sentral ng Pilipinas (BSP) published new rules in May 2018 that credit card companies in the Philippines must follow:
- Complete and simple disclosure of financing charge computation and other credit card fees
- Finance charges are calculated based on the outstanding debt as of the billing statement cut-off date, omitting current and deferred charges.
- Notifying clients in a timely manner before implementing any pricing modifications
- On-the-spot credit card payments via payment centers
- Due dates that fall on holidays and weekends are automatically pushed to the next banking day.
- When collection agents engage with consumers, especially those who have outstanding debts, they must use fair, reasonable, and professional methods.
If you are to be victimized by unfair debt collection activities, you should document your interactions and attempt to obtain as much information as possible. Save emails, text messages, or call recordings with the agent’s permission as evidence. Report these abusive collection practices to your credit card company’s issuing bank so that they can take more direct action.
Credit Cards has Perks and Rewards
One of the best benefits of using a credit card is the bonuses that come with it. Rewards, air miles, travel advantages (such as complimentary airport lounge access and travel insurance), and rebates are examples of these. You can’t always get credit card benefits when you pay with cash or with a debit card. More significantly, if your account is in good standing, rewards points do not expire. These points can be redeemed for merchandise, annual fee waivers, and other benefits.
You can start earning rewards as soon as you are authorized for a credit card. Some large banks, for example, provide sign-up bonuses to new customers. In line with this, because home purchases involve relatively high-value payments, additional incentives and benefits may be obtained due to the transaction’s diverse character.
Credit Cards Increases your Credit History
Another significant advantage of credit cards in the Philippines is that they can help you create and build your credit history. One widespread misconception regarding credit cards is that they might harm your credit score. No, because a credit card can actually improve your credit score over time. It increases your total available credit and decreases your credit utilization ratio, both of which are variables used to calculate your credit score.
If you don’t yet have a credit history, using a credit card properly can help you build one in the long term. Without it, it will be more difficult to obtain loans or lower auto insurance premiums. If you decide to buy a larger and more expensive house in the future, using your credit card will not be a problem because it will increase your credit score.
Once you have a credit card, you can use it properly, and the credit reporting companies will keep track of your borrowing habits. You’ll construct a stellar credit history as you demonstrate your ability to make on-time payments and keep your credit utilization ratio low. Because lenders will see you as a responsible borrower, your responsible borrowing behavior and high credit score may open the door to easier mortgage approval.
Credit Card Saves Time
Contactless payment is a compelling advantage to apply for a credit card right now. Consider not carrying that much cash. All you need is a credit card and some cash. There’s no need to count change in front of the counter at your neighborhood coffee shop while everyone else waits in line. As a result, you will have extra time because you don’t have to go to a bank or another location to make an on-the-counter (OTC) payment and wait in line. You also save money on fuel and transportation costs.
It’s also excellent for your health because paper money and coins, it turns out, can carry and transfer viruses and bacteria to your hands. And you don’t tidy your money, do you? In an age where hygiene is essential, reduce the risk by gradually eliminating the use of coins and dollars. Start with a credit card to practice contactless payment.
Security Features of Credit Card
Another advantage of using credit cards is that it is more protected than the traditional debit card or cash. If your credit card is lost or stolen, call your bank immediately to block the card and prevent unauthorized use. Any unlawful transactions should be reported. After that, the bank will undertake an inquiry and issue reimbursements for purchases you did not make. In contrast, if your cash is lost or stolen, there is a very little chance you will ever see it again. This will be something you will regret as you worked hard for that money to purchase a home.
If you are looking to buy a house for your family and plan to pay with a credit card, Bria Homes is one of the firms that offers affordable houses and lots for any sort of buyer. Furthermore, Bria Homes provides a variety of payment choices for clients’ preferences, including credit cards for their convenience.
Immerse yourself in BRIA’s 360 virtual tour at www.bria.com.ph and inquire online at www.facebook.com/BriaHomesIncOfficial. You can also make an online reservation at https://www.bria.com.ph/online-reservation/
Read Also: BRIA Offers Wide Selection of Payment Methods | Affordable House and Lot | Bria Homes