How I Manage Three Credit Cards Without Incurring Debt

Credit cards are different from charge cards like American Express and Diners. For charge cards, you have to pay in full when it is due. For credit cards as the name implies you can get credit by paying a minimum amount of 5% or RM50, whichever is higher, and carry forward the balance to the following month with a finance charge of 18% per annum. However, the danger is that you are incurring interest for the outstanding amount.  When you are not careful, the outstanding amount snowballs with compound interest over time to an amount beyond your means. You may end up as a bankrupt. A credit card is a double-edged sword.   It is useful and yet financially destructive.

I have three cards: CIMB PETRONAS MasterCard, Hong Leong Bank Platinum Visa card, and Hong Leong Bank GSC Visa card. I allocate different usage for each card so that all three cards stay active.

This is how I use the three cards to my advantage:

CIMB PETRONAS MasterCard: It is essentially a cash rebate card. When I pump petrol I charge it to this card. At the end of the month, I am given rebates on the amount spent. To maximize the usage of the card and pay less I charge all my utility bills such as telephone and electricity plus monthly insurance premium to this card. When you pay by cash you pay the full amount.

Hong Leong Bank Platinum Visa card: This is my grocery card. I use it in conjunction with The Store Card. I shop at The Store as it is situated next to my place of work. I charge all my grocery expenses to this card and collect reward points. At the same time, I present The Store Card, which is a membership card also to get points at one point for each Ringgit spent. Over time I redeem points accumulated to exchange for useful items. As for The Store Card, I can redeem for goods or their gift vouchers.         

Hong Leong Bank GSC Visa Card: This is my entertainment or movie card. I get discounts for the purchase of movie tickets. Right now there is a promotion going on for a year; I get a free ticket when I buy tickets on a Thursday to watch a movie on Thursday, Friday, or Saturday. You can take further advantage by joining   Golden Screen Cinemas (GSC) as a member so that during your birthday month you will get two movie tickets free. I also use this card for other purchases and big-ticket items and pay by their zero-interest instalment plan for 12 to 24 months   

Conclusion:

You will see that all the charges are my normal expenses every month. I don’t charge unnecessarily and I settle promptly and fully every month without incurring extra charges. I use my card wisely to reduce my expenses or maximize my spending and not to incur credit and build up debt.  

How many credit cards do you have and how do you manage your cards? Share with us.