Manila, Philippines

How to Reduce Credit Card Spending? Leave Some. Cancel Some.

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It’s the Christmas season again, when we see credit card bills skyrocket! But me, I left my cards at home. On purpose.

As of this writing, I already have 4 credit cards (modesty aside), all in excellent credit standing. I’m a full-payer / transactor in all those cards, and fortunately all cards are lowly utilized.

Recently though, I’ve been reviewing my monthly expenses (getting more mature you see?) and credit cards payables remain a major expense. So, among my actions points are:

  • Reduce credit card spending/usage
  • Reduce credit cards held

Reduced Credit Card Usage

I usually carry all my credit cards with me everyday as it provides ready credit in case of emergencies (hopefully none) or (more usually) impulse buys. Makes me very liquid. Gives me options on which card to use depending on the cutoff and when my purchase will be due (Read credit cards basics here). Cards are advantageous as well if you need to purchase on instalments.

But at the same time, this financial power is very tempting. Even though I do not revolve on my card dues, I still end up with some sizable payables every month. The allure of using your credit card even if you have cash on hand, is that you swipe and swipe, thinking that you have cash to pay for it anyway, thinking that you’re just deferring the payment. But in reality, you don’t set aside that cash meant for card payment. In fact you end up spending the cash anyway (meant for card payments) for something else. You end up spending higher than your means. My goal now is to use cash instead of card more often, so that I can track how much cash I really have left, and how much my future card payments are. Cash comes before card. Use card only as second option. Don’t use your card if you don’t have present or future cash! And don’t overuse your card just because you anticipate some future cash flows!


Reduced Cards Held

Carrying multiple cards with varying due dates also provides convenience as you are able to defer your payments in varying lengths of time. The catch is you have to monitor these due dates carefully and ensure that future cash flows are enough to fully pay the card balance (don’t revolve on the card as much as possible). But then again, tendency is to forget that your other cards already have similarly sizable balances, and you end up having all your cards heavily utilized. If you leave these at home or decide to cancel some of you cards, then you don’t get to use all your cards. Monitoring your usage of fewer cards will be more manageable, enabling you to spend more wisely. And let’s face it, let us not tempt ourselves with so much available credit.

After all, a combined credit limit of P300k from 3 cards in your wallet is very tempting compared to just bringing a card with P100k limit. Even if you spend the same amount on one card or spread out in 3 cards, it’s better to just use fewer cards. Less cards and balances to track, less due dates to meet. Less annual fees to pay.


Consider These

Other factors to consider on whether you really need multiple cards:

Annual fees. Is the aided cash flow you get commensurate to the annual fee you need to pay? Or the instant rewards and promos that you get to avail?

Risk of losing the card or getting stolen. If you have all your cards in your wallet and you get robbed, then you have to contact x number of banks just to have the cards cancelled. And the culprit will then have easy access to a more sizable stolen credit limit.

Cash Flows. Cards are there to aid your cash flows, not to increase it. You don’t get richer with using a card since you need to pay the balances every month anyway. So don’t feel like one. With a card, you should get wiser. Take advantage of the deferred payments and installment purchases on 0% or minimal interest, but not the minimum amount due. Safer to bring as well compared to wads of cash.

So my question now to my self is, out of my 4 cards, which one/s to fully settle, close and cancel? The one with the highest annual fee, the one with the least perks and rewards, the one with the lowest credit limit, or the least known credit card out of the 4?



 Filipino Personal Finance

5 Responses

  1. Geri says:

    Haha. Thanks shopper! Right now I'm the process of cancelling my two cards. Just transferring the bills auto-enrolled in these cards. Won't divulge here which ones. Keep on reading!

  2. shopper says:

    I say cancel the card with the least perks! Usually those with lots of perks have higher annual fee though. Or the least known card (what issuer?) as some stores accept limited issuers for installments.

  3. pen_name says:

    Hi Anonymous, thank you for the interesting question. Let me try to answer your question as best as I can.

    1. In the Philippines we are just getting started with a positive bureau (data sharing)(although we already have a negative file sharing between member banks years and years ago). Since positive bureau has just started I don't think we have a credit scoring standard yet industry-wide.

    2. It is really up to the bank's policy whether they will take against you the fact that you have a cancelled card with them. Note that I'm referring to customer-cancelled card here meaning no remaining balance and no usage, or if there is, satisfactory usage. This in general is not an adverse finding. The bank-initiated cancelled card is the adverse finding wherein unpaid card balances for 90+ days or more already get cancelled or revoked.

    3. Hence I think some banks decline card applications if they see that the applicant already has a cancelled card with them, whether customer-initiated or bank-initiated. But I would like to think that majority still accept applicants as long as there are no adverse cancellations, even if there was a customer cancellation. It's really up to the banks.

    4. Maybe they don't want to keep on giving cards to customers who just keep on cancelling it. Challenge then is for them to discern between the perennially cancelling customer vs the prodigal customer whose returning for another try of their card.

    Hope this helps!

  4. Anonymous says:

    how about your credit score? will canceling the cards affect it?

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