Thinking of Getting a Credit Card? Read This First.

Hey Ipon Challengers! A quick announcement: starting next week, we will be posting once a week, every Monday. Without further ado, let’s go straight to today’s issue.

Perhaps one of the biggest adulting milestones, second to getting your first paycheck, is getting a credit card. It's shiny, convenient, and feels like a financial rite of passage. 

But is it actually a smart move when you're in your 20s? Let’s break it down.

In today’s edition, we’ll go over:

• What a credit card is

• Pros and cons of a credit card

• When you should not get a credit card

• 3 surprising truths about credit cards you probably don’t know about

TLDR;

The Bottom Line

• Credit cards are useful but not they’re not “free money.” They let you borrow money up to a set limit and must be paid off monthly, ideally in full to avoid high interest.

• They help build credit ,but only if used responsibly. Paying on time boosts your credit score, which can help with future loans, jobs, and rentals.

• Don’t get one if you’re struggling with money or impulsive spending.
  If you live paycheck to paycheck or don’t budget, a credit card might do more harm than good.
  

The content

🧠How Do Credit Cards Work? (For Absolute Beginners)

A credit card lets you borrow money from a bank to pay for things online or in-store. You get a credit limit (say, ₱20,000), and you can spend up to that amount.

Every month, you’ll receive a statement showing what you spent. You can either:

• Pay in full (no interest charged), or

• Pay a minimum amount (but the rest gets charged interest).

NOTE: It’s not free money. It’s borrowed money. And if you don’t pay on time or in full, the bank will charge you interest and possibly fees.

✅ The Pros of Having a Credit Card

1. Builds Your Credit Score Early
   Using a credit card responsibly helps you build a credit history, which is essential for future big goals like getting a car loan or a home loan. The earlier you start (and manage well), the better.

1. Rewards and Perks
   Many credit cards offer cashback, travel points, discounts, and even freebies. If you’re already spending on essentials, you might as well get something back.

   

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2. Online Convenience
   Whether it’s booking flights, subscribing to services, or shopping online, a credit card often makes the process smoother and safer.

3. Emergency Buffer
   When life throws an unexpected expense your way (like a hospital bill or sudden car repairs) a credit card can act as a short-term buffer, especially when cash is tight. Although, we recommend using credit as LAST resort, not the first choice.

❌ The Cons of Having a Credit Card

1. Easy to Overspend
   Swiping doesn’t feel the same as handing over cash. Before you know it, you’re spending beyond your means and building up a balance you can’t pay off in full.

   

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2. High Interest Rates
   Miss a payment or carry a balance? You could be looking at 2–3% monthly interest (that’s around 24–36% annually). That’s money you could’ve saved or invested instead.
   

3. Hidden Fees
   Annual fees, late payment charges, over-limit fees, and even foreign transaction fees can quietly eat away at your budget.

🛑 When You Should Not Get a Credit Card

• You’re Living Paycheck to Paycheck
  If you struggle to make ends meet monthly, a credit card might tempt you to spend money you don’t really have.
  

• You Don’t Track Your Expenses
  If budgeting isn’t part of your routine yet, it’s too easy to swipe mindlessly and fall into debt.
  

• You Plan to Use It for Wants, Not Needs
  A credit card isn’t extra money. It’s borrowed money. If you’re planning to use it mainly for travel, shopping, or lifestyle upgrades, you’re setting yourself up for a debt spiral.

  

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You Probably Don’t Know This…

3 Shocking Truths About Credit Cards

1. Minimum Payment = Maximum Trap
   Paying just the “minimum amount due” keeps you in the bank’s good books, but it means you’ll stay in debt for years while interest piles up.

   

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2. Good Credit Can Affect Job Offers and Condo Rentals
   Some employers and landlords now check credit reports. Poor credit could mean losing out on opportunities, not just loans.

3. You Can Have a High Credit Score Without Being in Debt
   A common myth: you need to carry a balance to build credit. In truth, consistently paying your full balance on time builds credit without paying interest.

Final Verdict

💡 Final Verdict

A credit card is a tool. In the right hands, it can help you build your financial future. But used recklessly, it can become a burden.

If you’re disciplined, budget-savvy, and confident in your ability to pay off your balance in full each month, go for it. 

But if you're still figuring out your spending habits, it might be smarter to wait. Your 20s are a time to build wealth, not debt.

Ready to get your first credit card? We’ll discuss the best options for you in a future issue. Keep posted!