Tips for credit card management

Statistics published by the Hong Kong Monetary Authority show that there were slightly over 17.2 million credit cards in circulation at the end of Q3 2015. Such high numbers indicate that credit cards are a highly favored / sought-after financial product.

There are several reasons to this: credit cards provide you with an interest-free repayment period, you can avoid the hassles of carrying large amounts of cash, you can use them at both brick-and-mortar retailers and at online outlets, and, of course, the rewards associated with credit cards like air miles or cashback or discounts make them a very attractive option.

And, if used properly, credit cards can even help with your spending and financial planning. However, the excessive use of credit cards can easily lead to spending beyond your means, resulting into serious financial problems. The following tips will help you get started on becoming a smart credit card user:


Understand your situation – Get yourself a credit card after you’ve taken into account your financial lifestyle, your money needs and your spending habits. Don’t plump for a credit card packed with short-term offers but which is not viable for you in the long term. For instance, if your major spends are on fuel, a petrol card would be great for you.

Learn about card features – Once you determine how you will use a credit card, it is important you understand all of a particular credit card product’s features including:

▪ Annual Percentage Rates (Interest rates applicable on a card)

▪ Annual, late, over-limit, cash withdrawal and other fees

▪ Credit limit

▪ Grace period before interest starts accruing

▪ Rewards, their applicability, conditions attached, redeeming rewards

Monitor usage – Always keep an eye on your credit utilization and make sure your spending does not go out of hand. Opt for transaction alert services on your credit card; you will get instantly notified of transactions happening on your card through email / SMS. Don’t throw away your card receipts. Verify them against your credit card statement and bring any discrepancies immediately to the notice of your card issuing bank.

Big purchases – Always think twice before making big purchases. Check whether you can actually afford such purchases given your cash flow. Sometimes issuers allow you to make payment for big purchases in monthly installments at low interest rates. Use such offers if you must make a “big ticket” purchase.

Don’t miss payments – This is a no-brainer. If keeping track of the dates is a problem, opt for automated payments. Missing payments means you will need to cough up late fees plus interest plus suffer damaged credit scores.

Don’t carry over large balances – Large balances attract large interest payments. Your trouble just keeps multiplying. Fast.

Don’t just make the minimum payment – You will land up in the situation we just outlined above.

Using multiple cards – [Kindly note: This is only for the advanced (read: disciplined) credit card user]. You’re a smart, disciplined credit card user, you settle your card bills in full, yet you feel that there is more to harvest. In that case, consider this: if you are maxing out on the rewards on your card but there is still some gas leftover in your high-spend categories then try going in for another same category-high rewards card, this time from another card issuer. You could possibly earn a little more from your unutilized high-category spends.

A credit card is a great tool to have; just make sure that you’ve planned its usage carefully to enjoy its benefits fully.