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Consolidating debt with a credit card

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Are you considering credit card debt consolidation to simplify your bills? Before you sign up, you need to understand what it is and if it can really be beneficial to your specific situation.

Credit card debt consolidation basically means merging or combining your multiple credit card bills into one new “bundled” credit card debt, with much lower / more manageable monthly payment. So instead of having to pay multiple issuing banks or creditors, you just need to pay a single bill and single bank each month. Some creditors waive off penalties (late payment charges, overlimit charges, etc.)

Consolidating all your debt using your credit card may seem like a good idea, and it probably is. However, it also has some downsides. Here are the pro’s and con’s of consolidation.

PRO’s:

  1. Lower interest rate and monthly payment – You can enjoy significantly lower interest rates when you consolidate, allowing you to gain back control of your monthly cash flow. Paying a lower amount to only one creditor gives you some breathing room to build up a savings account.
  2. Simpler bills management – You no longer have to worry about multiple bills. When you consolidate debt, you only have to make a single payment. There’s almost no chance you’ll ever forget to pay again.
  3. Improved credit score – If you pay your new consolidated debt regularly and on time, you slowly clean up your credit history and thus improve your score.

CON’s:

  1. Longer payment period – The consequence of paying less interest is paying longer. For instance, it may only take you two years to wipe off your debt without consolidation if you are disciplined. With consolidation, it may take you three years.
  2. Higher overall cost – In some instances, the total amount of interest paid over a longer period is actually higher.

Debt consolidation using a credit card may be a good short term solution for people who really need some financial order and breathing room as soon as possible. If you don’t trust yourself to pay off your current credit card debt without consolidating, then perhaps this solution is for you. However, if you can stick to a routine of paying as much as you can on your current debt, you may end up saving more money if you do not consolidate.



Featured Credit Cards:

PNB Visa Credit Card


FEATURES:

  • Apply for a PNB Visa credit card and the first year’s annual fee is FREE!
  • The PNB Visa Credit Card allows you access to over 25 million establishments all around the world!
  • Need cash? There is no need to worry as PNB Visa Credit Card lets you have cash advance anytime of the day at any PNB ATM outlets near you for emergencies!
  • Avail of financial flexibility and pay for as low as 5% of your whole purchase with their Easy Payment Terms and Installment Plans!

CITI SILVER MASTERCARD AND VISA


FEATURES:

  • Pay an annual fee of Php1500 for your primary card!
  • Go over your credit limit and pay for just Php500 or 3% whichever is higher!
  • Enjoy a finance charge rate of 3.50%
  • Earn rewards points with every Php30 spent with your Silver Card!
  • Travel with comfort with Travel Inconvenience Insurance provided by your Silver Card when you buy your plane ticket!

Landmark – Anson’s Card


FEATURES:

<ul>
<li>Free membership for 12 months</li>
<li>Lowest monthly fee of Php80 per month</li>
<li>Earn rewards when using your cards and exchange them for free gift certificates</li>
<li>Avail of Weekly Wednesday discounts</li>
</ul>

EXPRESS BLUE MasterCard – BPI Credit Card


FEATURES:

<ul>
<li><span style="font-size: x-small; line-height: 11px;">Pay an annual fee of just Php1550 for your initial card</span></li>
<li><span style="font-size: x-small; line-height: 11px;">Shop and dine anywhere you want with the BPI Express Credit Blue MasterCard in over 30 million establishments worldwide!</span></li>
<li><span style="font-size: x-small; line-height: 11px;">Get travel insurance of up to Php2000000 once you charge all transactions with your BPI Express Credit Blue MasterCard!</span></li>
<li><span style="font-size: x-small; line-height: 11px;">Withdraw 30% of your credit limit whenever you need it for emergencies!</span></li>
<li><span style="font-size: x-small; line-height: 11px;">Avail of finance charge of 3.4%!</span></li>
<li><span style="font-size: x-small; line-height: 11px;">Get help managing your money with S.I.P. Facility of BPI Express Credit Blue MasterCard!</span></li>
<li><span style="font-size: x-small; line-height: 18px;">Earn 1 point for every Php35 worth of transaction with your BPI Express Credit Blue MasterCard!</span></li>
</ul>

Featured Articles:

KEEPING AWAY FROM CREDIT CARD PROBLEMS

Once used properly and efficiently, credit cards are handy and suitable devices for just about anyone who is of age. It can even assist you with upcoming activities like buying a house, getting another degree and sometimes going for a leisure trip somewhere abroad with family and friends. Before you allow your teenager or yourself to get a credit card, know some of its advantages and understand some of its procedures.

A credit card can allow you to bUy products or services which you need right now but can’t afford to pay all of it at once. Sometimes it’s often the single way to pay for hotel accommodations, car rental fees or airline tickets.

Credit cards also allow it holders to purchase items over the phone or sometimes in the internet. You can shop and pay your monthly bills in the convenience of your very home! Some credit card companies offer virtual banking that lets you shop and transact business online.

It is also safer to carry a credit card than to carry cash around wherever you go. For the most part, credit cards are very useful in instant emergencies like accidents, car breakdowns or calamities.

You could actually even give anything you purchase protection, avail of travel insurances, free miles and even cash back bonuses if you charge your transactions with your credit card.

One fact is for sure; having a credit card is convenient at times but also remember that a credit card tempts you to spend money you don’t have. Always have the sense to follow up on your credit card to avoid overspending which can give you a big headache in the future. Use your credit cards in ways that you benefit from them, not them benefiting from you!

Understand what you’re getting into before you start building up credit card balances. Once used wisely, they are an absolute help in budgeting. But if not, they will turn up to be your greatest nightmare.