Last month, when I was about to pay my credit card bill with the combination of a check and cash I had in my wallet, I found that I was P2,000 short. Since I still had a few days before the actual due date, I made a mental note to pay the rest the following day.
And promptly forgot about it.
The following week, I went shopping with my kids. I had some guilt-free money to spend. After buying stuff for my kids, I bought hubby some management books. I’ve had my eye on those titles since last year and wanted to surprise him. Bought myself some stuff, too, of course hehe. I was actually proud of myself. This was programmed spending. This was good.
Or so I thought. Came the time for my credit card billing to go sailing through the door. Wham, bham, kazzam, kablooey. My “small” P2,000 mistake gave the bank an excuse to charge me interest of P3,000. Ouch.
This is how pernicious it is to roll over credit card debt. If you pay in full, your grace period will allow you to borrow money interest-free for more or less a month. When you pay in full, you have in effect free money for, say, 30 days. Some, even for 45 days.
But if you leave even a P5 balance come billing time, you get penalized with interest on that itsy bitsy balance AND new purchases. You immediately lose whatever grace period the card gives. Every purchase you make gets charged interest immediately after you swipe.
And don’t forget that most Philippine credit card companies charge interest using an average daily balance method. They add each day’s balance on your credit card and divide that by the number of days in your billing cycle. This means the more you use your card, the more expensive interest becomes. This is not the same as merely computing how much is 3.5 percent of P60,000.
Erwin Oliva asked a very good question on whether doing a balance transfer is a good move. If you are thinking of getting the balance transfer offers of many credit card companies with “low add-on rates”, read the fine print first. You MAY get a smaller rate than the usual 42 percent per annum, and they will amortize your payments so that you pay a uniform amount monthly.
The catch is that as you release some of the debt-induced tension courtesy of your balance-transfer deal, the new shiny card will encourage you to swipe and swipe. And if you fail to pay your balance in full on that new balance-transfer card, you will lose your “preferential rate.”
These are very costly mistakes. As for me, this was a costly error that I am never going to repeat. But, hey, I’m human too, hehe.
June 29th, 2007 at 8:29 am
[...] sent this comment on my previous post on Costly mistakes when using a credit card. Can you please explain the computation (of finance charges)? How can my [...]
June 20th, 2007 at 10:00 pm
In terms of on-line platform, they are similar with respect to basic features i.e., security features (session expires if you are idle after a few minutes), it shows the list of your account, you can do fund transfers between your enrolled accounts within the same bank at no cost. I guess what you need to find out is how to maximize the benefits of using on-line banking and your objectives for using it.
I have three local accounts in the Philippines and I have on-line banking for all of them (BPI, Equitable and Metrobank). My main objective for banking on-line are bill payments and account tracking. My parents used to send me money for household expenses and I don’t want line-up in the ATMs just to check if the money was already credited or not. Also, before I left the Philippines, I still have some credit card dues, bills like insurance premiums which I need to continue paying regularly. On-line baking is very useful for this purpose especially if your salary or certain income is automatically tranferred to your account regularly.
Here are some thoughts on the unique features of my three accounts. This is not comprehensive but they are all based from experience.
BPI:
At bpiexpressonline, you can pay bpi credit card bills, bills from affiliated ayala companies and other bills on their list. If you are paying regular bills with fixed amount i.e. insurance premiums, you can set-up a recurring transfer option. If you have some excess funds, you can apply for a TD on-line. You can enroll third-party accounts for fund transfer e.g. you can enroll your kids’ savings account so you can transfer money in their account when needed or if you wanted to.
If you forgot your password or made three wrong password entries, the account will be locked by the system. What I love with BPI is you can call their 24-hour hotline to unlocked your account. Some may find this feauture a security risk but I like this feature because I’m away from the country. The security questions are difficult to answer if you are not the account holder.
Bpiexpressonline will also show you all your accounts balances, including credit cards balance, minmum payment due, payment due date, etc.
EQUITABLE-PCI:
As I mentioned before, I use equitable for sending money in the Phils. The best thing about equitable is you can transfer funds to a third-party account even without enrolling that third-party account. Unlike BPI Equitable does not require enrollment. So when I send remittance, I send it to my account first then I transfer the amount needed for household expenses to my aunt’s account in Equitable.
But unlike BPI, the online TD application is not available at Equitable PCI online-banking.
I’m not sure how to deal with forgotten passwords.
METROBANK:
I’m not using this very much right now. Before, I use it for credit card payments but now my card is paid and cancelled already so no more use for the on-line facility.
Before, I tried to enroll my Aunt’s account so I can transfer funds when needed but they told me my Aunt should also enable fund transfer to her account. Too much hassle. I ended up asking my Aunt to open an account with Equitable instead.
From experince, Metrobank is the most difficult to deal with. Imagine when I opened my account - it was a CASH only account - meaning, I cannot deposit checks. How ridiculous! Btw, Equitable also does that. I wonder why?
June 13th, 2007 at 6:54 pm
I’m doing my online payments and fund transfers through banco de oro. very easy and very efficient too.
June 13th, 2007 at 5:31 pm
I like the online platform of BPI. very easy to use. can do fund transfers to my current account in a click of a button, and your session expires when you became idle. very good security features indeed. I hope other banks can do such a good and user-friendly platform. They must take advantage of the internet technology. I also wonder why bancnet’s online facility is far more superior than expressnet’s? if you’re a bancnet customer you can check your balance, transfer funds, and so on. That is what online banking should be. On the other hand, expressnet can only direct you to the website of their member banks. It’s just really sad that my banks are with expressnet.
June 13th, 2007 at 3:18 pm
hi nina, you made me think about something i have been planning to do. any recommendation which bank has the best online platform?