Pinoy Money Mistake: Credit Mismanagement.

This is Part 2 of 3 of the Money Mistakes Among Pinoy Series

Part 1 | Part 2 | Part 3

After Discussing the First Pinoy Money Mistake about Overspending, This blog post will discuss about Credit Mismanagement.

Credit Mismanagement is brought to you by your Personal Loans, Credit Cards, Mortgages

According to Market Manila 2011, Southeast Asian Central Banks 2008: Philippines has 28% of total household debt in the form of credit card loans.

I believe this is true, I was once buried in credit card debt. Most of Credit card users, used their credit cards for “WANTS” and needs, there is a wise spending technique in using credit card.

Use your credit card, if you can fully pay the card before it’s deadline. Because the moment that you pay minimum, you are already in Financial problem. Enjoy the perks that you can get from the credit card like bonus points but don’t be buried with debt with credit card or else you will suffer the consequence of having a compounded monthly interest to your credit card.

Using the compounded formula as an example if you have a 10,000 debt and you did not pay for your debt in one year, your debt will be affected with compounded interest as follows:

Given : @ 2.5% Interest Monthly

10,000 x 1.025^12 = 13,448

Imagine your wants today could increase to a nightmare on the following years if you will not use your credit card well..

So today’s take.. Use your credit card wisely.. But did you know that you could reverse that compounded interest if instead of buying your wants is Investing you hard earned money.?