How to use credit cards smartly

Credit cards are becoming increasingly popular, but not everyone understands the regulations regarding interest-free periods, payment requirements, additional fees, etc.

Spending before paying is a characteristic of credit cards. When using a credit card, the bank will provide a certain credit limit for the card, and users can spend and pay with the amount within that limit. When it comes to payment due date, users need to deposit or pay back the amount they have spent to the bank.

Types of fees when paying with a credit card

Mr. Trinh Cong Hoa - Founder of the personal finance and investment blog TienCuaToi.vn - listed some common types of fees when customers pay with a credit card:

Annual fee: Customers pay this fee once a year, depending on the bank, this fee ranges from 200,000 to 500,000 VND.

Cash withdrawal fee: Customers can withdraw cash up to 70% of the credit limit granted. Because credit cards are issued by banks to encourage customers to pay without cash, customers should only use this “trick” when necessary. Otherwise, customers will have to bear a fee of 2-4% of the amount withdrawn, depending on each bank’s regulations.

Late payment fee: Customers must pay a late payment fee when they do not pay, or pay less than the minimum payment amount. This fee is usually equal to 3-4% of the minimum payment amount.

Credit limit exceeded fee: Banks allow customers to “go over” the allowed limit provided they pay an additional fee on the exceeded amount. Depending on the bank’s regulations, this fee may be set at a specific rate.

Penalty interest fee for late payments: Many banks also apply overdue interest rates equal to the late payment interest rates to help customers deal with financial overload. However, the late payment interest rate will vary depending on the bank’s policy at different times.

Credit cards are one of the popular card types (Photo: My Tam).

What should be noted when using a credit card?

With the characteristic of spending before paying, credit cards always have great appeal to users, especially young people with modern spending habits.

However, sometimes users will fall into an uncontrollable shopping situation and become “addicted” to swiping the card. And this is the time for the bank to calculate interest. Therefore, customers need to consider their financial ability before deciding whether or not to make additional purchases.

Customers need to note the importance of controlling monthly expenses and managing credit card debt by remembering to pay on time and in full. Card users should also set a spending limit within their means. Currently, many people have up to 3-4 credit cards while failing to control their personal finances, which can lead to financial imbalance.

Customers should also note that they can get cashback when using credit cards and choose products with good reviews. For example, when using TPBank’s Flash 2in1 card, customers receive benefits including point accumulation and cashback.

When spending from a payment account, customers receive unlimited points. When spending from the credit limit, customers receive up to 10% cashback. In addition, the Flash 2in1 card always has short-term benefits in many areas such as food and drinks, travel, and shopping …

The Flash 2in1 card by TPBank (Photo: TPB).

Customers should use a variety of credit cards to optimize the best incentive and promotion programs offered by banks. For example, those who love traveling can use TPBank Visa Signature card, as they will have free access to over 1,100 business class lounges at airports around the world and in Vietnam.

If you are a good spender who knows how to allocate your budget reasonably for necessary and demand spending, you should take advantage of the advantages that credit cards bring and limit the disadvantages of using cards. To create a habit of spending and paying debts on time, customers should start with one card with a limit equal to or twice their monthly income.

Most importantly, you must determine your monthly spending plan based on your income and fixed expenses. Then, you divide the amount that can be used on each credit card to avoid exceeding the credit limit, ensuring that you have enough money to pay on time as well as optimizing the incentives of each card type.