(This is part of Take Charge of Your Money , a partnership between INQUIRER.net and Citibank to help readers handle their personal finances well.)

Question: I applied for a credit card last summer with my new officemates. I’m a new college graduate working on my first job. I noticed that my friends were so excited to use their cards and would do so at every opportunity. They tease me because I am so hesitant to use mine, and still pay cash when possible. What is the best way to use a credit card? What do I need to know to handle my credit card well? – Jana P.

Answer: Congratulations and welcome to the working world! You are now earning your own keep and have a bright future ahead of you.

We are sure that you want to be financially secure in the future. Having a credit card can help you achieve that. This is because by having your own credit card, you are building your own credit history. If you have proven yourself credit-worthy over the next few years, you will have easy access to credit which you may use for business or personal needs (to buy a car or a house, for instance), to help you and your family.

By having a credit card, you don’t have to bring loads of cash to buy big-ticket items such as appliances. There are deferred payment plans allowing you to pay in easy installments over a specified period of time.

The first thing you need to know about credit cards is that every purchase you make becomes a borrowing from the credit card company. As such, it demands responsible use. After all, all debts need to be paid.

You can pay your bill in full on or before the due date, or pay a portion of it—either the minimum amount (about five percent of your total bill) indicated or any other amount beyond it. When you don’t pay your bill in full, you will be charged interest which may vary in rate from one credit card to another.

You will also be charged a late payment fee should you fail to remit your payment on or before the due date.

Many people fall into problems by not using credit cards responsibly. When making purchases beyond what they can afford to pay, they put themselves in deep trouble as their cash flow for necessities is affected. They also put themselves up for legal trouble when they don’t pay what is due. And debt troubles have robbed many people of a good night’s sleep.

Here are some tips on how you can be a responsible credit card holder:

1. Familiarize yourself with your credit card’s billing cycle. Find out the cut-off date when purchases will be posted and included in the next bill. For instance, if your credit card’s cut-off date is every end of the month, all purchases made until July 31 will be included in the bill due in August. This will help you see if your budget can still accommodate a purchase.

2. Set a monthly charge limit and stick to it. Your credit limit is not additional spending money. Some people make the mistake thinking if their salary is P20,000, and they have a credit limit of another P20,000, they can spend P40,000. Do not overspend to avoid embarrassment at check-out counters when your credit card is declined.

3. Pay bills promptly to avoid late payment fees. To make things easier, consider signing up for bills to be sent to you by e-mail. Then pay your credit card bill online from your bank account to save on time.

4. Pay off the amount due as much as you can to prevent the total amount due from ballooning due to interest.

5. When your bill arrives in the mail, compare your charge slips with the entries recorded in the bill. Immediately call the credit card company hotline if there is a discrepancy.

6. Keep your credit card in a safe place. Treat your credit card like cash – you won't leave cash lying around, would you? Report stolen or misplaced credit cards immediately to block off potential unauthorized purchases. Also, keep credit card bills, charge slips, and proof of payment on file in a folder for easy reference.

7. Don’t allow other people, even family members, from using your credit card and posing as you. That is fraud.

8. When purchasing online, make sure that the website you are visiting is secure. Hackers may see your credit card details and use them if the website is not secure.

9. In case you are moving houses or offices, inform your credit card company so you can still get your bills on time.

10. You can make a cash advance using your credit card. However, doing so can be costly as you will be charged a one-time transaction fee aside from the interest, which is usually higher than for purchases. Use a cash advance for emergency only, and not to pay off your credit card bill or finance your day-to-day living expenses.

11. Get only enough credit cards that you need. Some people need only one, while for others, having two is ideal to separate personal from business expenses.

12. Play your cards right. Credit cards offer rewards points for every use which you can redeem for gifts, air miles, annual fee waivers, gasoline rebates and more. When shopping or dining, check if paying with your credit card entitles you to a discount or freebies.

A credit card is a big convenience for many people. Use it responsibly to maximize its benefit. For more wise use of credit tips, log on to www.usecreditwisely.citibank.com.ph.

(INQUIRER.net and Citibank invite readers to ask questions regarding financial matters. Send your questions to personal_finance@inquirer.net or comment through our personal finance blog called MoneySmarts)

*Disclaimer: Readers are solely responsible for their own investment decisions and should thus conduct their own research and due diligence and obtain professional advice. INQUIRER.net will not be liable for any loss or damage caused by a reader's reliance on information obtained from our web site. INQUIRER.net receives no compensation of any kind from companies or industries or funds that are mentioned here.

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