Advantages of Using Credit Card for Your Home Expenses
10 December 2022Many Filipinos in the Philippines are discouraged from owning a credit card because of the idea of credit card debt. The truth is that most cardholders do not incur debt and instead enjoy additional benefits such as rebates, rewards, and greater financial freedom. Even when buying a house and lot in the Philippines, using a credit card can come in handy. Having a good understanding of how it works can help you manage your debt effectively and plan out your monthly payments so that you do not accumulate any debt.
Cash is the most common method of payment for any purchase. However, there are some of us who use checks for transactions as well. When you issue a check for payment, you must ensure that you have more than enough funds in your checking account, and maintain a deposit balance in it.
You might think that purchasing a house via a credit card is difficult, wouldn't you? No, it isn't. Your credit card could be used to borrow the money and you could buy the house outright if your credit is good enough. While certain circumstances may allow you to accomplish this, we strongly advise against it. However, there are a lot of advantages you can enjoy and take advantage of when you use your credit card for home purchases.
5 Perks of Using a Credit Card for Home Purchases
1. You're entitled to lots of perks and rewards.
A credit card comes with many bonuses, which is one of its key benefits. There are a variety of rewards, air miles, and travel benefits including complimentary access to airport lounges, travel insurance, and rebates. When you pay with cash or debit cards, you don't always get credit card benefits. Also, as long as your account is in good standing, reward points are not subject to expiration. Other benefits can be obtained by redeeming these points, such as merchandise and annual fee waivers.
Obtaining a credit card will enable you to earn rewards right away. There are some large banks, for example, that offer sign-up bonuses to new customers. Due to the relatively high value of home purchases, you may qualify for additional incentives and advantages.
2. You are legally protected by Law.
The Philippines has a law protecting credit card holders from abusive collection practices. The Philippine Credit Card Industry Regulation Law (Republic Act 10870) is one of the top benefits of using a credit card over other forms of payment. You must remember that purchasing a home using your credit card means paying a huge amount over a long period of time.
3. You're increasing your credit score.
Another major benefit of credit cards is that they can assist you in building your credit history. Credit cards are often viewed as harmful to your credit score because of a common misconception. Your credit score will actually improve over time if you have a credit card. You can enhance your credit score by growing your total available credit and reducing your credit utilization ratio.
When used properly, a credit card can help you establish a credit history over time. If you don't have a credit score, getting a loan or lowering your auto insurance rates will be more difficult. Utilizing your credit card in the future will increase your credit score, so you will not have a problem buying a larger, more expensive house in the future.
4. You save time on credit card transactions.
Now is a suitable time to apply for a credit card that allows contactless payment. Think about not carrying so much cash. The next time you're in line at your favorite restaurant or local coffee shop, there's no need to count change. Because you are not required to go to a bank or other location to make an OTC payment, you will have extra time.
5. Your credit card has security features.
A credit card is also more secure than a traditional debit card or cash. Your bank should be notified immediately if your credit card is lost or stolen so that it can be blocked and unauthorized use can be prevented. You can also report unlawful transactions. Afterward, the bank will conduct an investigation and reimburse you for purchases you did not make.
Things to Look for in a Credit Card
Picking a credit card for yourself is a critical financial decision. Considering that, you have to make sure that you have a full grasp of the every aspect of the card before choosing one. To help you do that, here are vital features to look into in picking a card:
Security Features
It's crucial to know the security features that come with your credit card. Unauthorized purchases can affect your credit history, especially if we are talking about large amounts. Take note of the hassle-free options available when you need help with your credit card.
Fees
Fees associated with credit cards include annual, foreign transaction and balance transfer fees as well as late payment charges. By using your card responsibly, you're less likely to encounter late-payment fees. Some fees, such as annual fees, cannot be avoided, so you're stuck paying them year after year.
Annual Percentage Rates or APR
Credit card companies offer cards that can have multiple APRs. There are introductory APRs, balance transfer APRs, standard purchase APRs, cash advance APRs, and penalty APRs. If you're weighing your options, you should be aware of all of them and compare them across card options. Just remember to pay interest rate on time if you're capable to pay your balance on or before due dates and in full amount every month.
Rewards and Promotions
New applicants are often attracted to card issuers by promotions such as welcome bonuses, introductory APRs, or 0% APR on balance transfers. Make sure you thoroughly understand these offers before taking advantage of them, as they can be a great tactic to earn extra rewards from your credit card. Also, you can be rewarded with a credit limit upgrade if you use your card responsibly.
Acceptance Rate
Different credit card networks have different coverage areas. It is important to verify the acceptance footprint of the card issuers you are considering before making a decision.
Knowing how credit cards work, their benefits, and how to use them responsibly, it might be time to find the perfect card for your lifestyle. Opting to use a credit card instead of applying to traditional mortgage lenders might be handy. But you must consider several factors.
Is Home Purchase Using Credit Card Really Possible?
It is possible to purchase a house with a credit card, but the process is not as simple as swiping your card. There are many places where the average consumer doesn't have a high enough credit limit to buy a house.
This method of purchasing a home does not require you to put your credit card down at the time of the sale. It is very rare for sellers, representatives, and title companies to accept cards as payment. In some states, certified checks are even required when funds are ready for transfer. This means you will have to use your credit card cash advance to purchase a certified check at your bank, then show up at the sale.
If you are considering a cash advance as a financial option, there are a few things to consider. A withdrawal fee of up to 5% is collected by credit card issuers for cash advances. Credit limits are lower than cash advance limits and a benchmark of 30% of your total credit limit is a good place to start. Note that cash advances are subject to interest charges from the moment they are taken out.
Acquire Your Valued yet Affordable Investment only from Lumina Homes
Are you looking for ways to start investing soon? Good news! Lumina Homes offer affordable real estate properties that are perfect for your investments. From ready-for-occupancy units to preselling affordable house and lot for sale, Lumina Homes has ideal options you can choose from. As one of the most trusted community developers here in the Philippines, our goal is to provide every Filipino with access to affordable housing programs.
We develop communities that come with functional amenities like mini gardens, playgrounds, basketball courts, and commercial areas. Also, our projects are carefully placed in accessible sites nearby to major thoroughfares, transport hubs, schools, hospitals, and business and leisure centers.
Lumina Homes offers you a wide range of options to purchase an affordable house and lot property with flexible payment terms to secure your down payment and monthly dues. Get in touch with an accredited Lumina Homes seller and let us help you start your home investment. Reserve a unit today!
Loan Calculator
Try Lumina Homes' loan calculator and get an estimate computation for your preferred Lumina property and home model.