leolion | một ngày trước | 3 min read

Why I Use Credit Cards

Why I use credit cards

I use credit cards as a source of funds to rotate my cash for spending, like borrowing money from the bank for free for 30 days. However, I strictly control the total spending on each card and what categories I spend on, to get the best benefits, because these cards charge an annual fee from a few hundred thousand to a few million VND.

The nature of a credit card is that it gives you an interest-free loan for 45 days from the transaction date (not from the statement date).

Many people do not understand how credit cards work, so they often run into two problems:

They think they have 45 days interest-free so they spend comfortably, and when the statement comes they still think they have another 45 days, so they wait for the next month’s salary to pay it off. Interest is accrued daily from the date interest starts and it becomes a lot over 30 days.
They think all cards are the same and just swipe any card, but if you optimize cashback, the amount refunded each month can be around 200–300k VND, which is a lot for me, because the annual maintenance fee for a card is about 1.5 million VND, so having this amount to offset the fee is also good.

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A little hidden tip is that each time you reach the renewal date, you can call in and threaten to cancel the card; they will offer to let you keep it by waiving that year’s fee. They will refund you (Citibank is about 770k/year) by crediting the amount back to your card.

How do I allocate different cards for different types of income and expenses?

Citibank => Eating out, movies, shopping malls

6% cashback on spending at Grab (Food, Rides & Delivery) and CGV
4% cashback on insurance payments
2% cashback on spending at shopping malls and fashion stores
0.3% cashback on other spending
Foreign transaction fee: 4% of the transaction amount (the highest)

=> Prioritize using it for shopping and dining payments
=> Prioritize using it for Grab and entertainment services

HSBC => Grocery shopping, supermarkets, convenience stores

Annual fee waived for 3 years

8% cashback on transactions at Supermarkets and Convenience stores
1% cashback on Tuition fee payments
Unlimited 0.5% cashback on all other transactions

Foreign transaction fee: 3.25% of the transaction amount

=> Use HSBC card for Tiki purchases
=> Use for Lazada, Shopee purchases

SC => Miscellaneous expenses

Annual fee waived for 3 years

0.6% cashback on all domestic transactions (25k/1 point). 1.8% on international transactions (25k/3 points)
Travel spending earns 3x points for every 25k spent
Spending in currencies other than VND is considered international spending
Foreign transaction fee is 3.5%. After deducting the 1.8% cashback, the net fee is 1.7%.

=> Prioritize using it for international e-commerce payments
=> Transactions that incur foreign currency, such as bills for international services

Check out a detailed table of cashback points on credit cards

I hope my brief sharing helps you develop a new mindset in optimizing credit card spending so you can use them effectively, get the most benefit for yourself, and avoid getting into debt from overspending.