by Moneymax, on category "Credit Card"
April 4, 2014
It isn’t always easy to get a credit card. You may run your own business and therefore don’t have a stable income. Or you have been declined several times when applying for a credit card due to a lack of credit history. Banks in general are not too keen on having people with no credit history apply, and for those with a bad credit history, it’s particularly difficult. When applying for a regular credit card doesn’t work out, you could try to apply for a secured credit card. Here we explain the workings of the secured credit card and have a look at which banks are offering them.
Read More: Pay Pag-IBIG loans and savings thru credit card
A secured credit card shares many similarities with a regular credit card. The main differentiator is that a secured credit card requires you to give a deposit to the bank which is at least as large as your credit limit. This means that if you put down a P10,000 deposit, you’ll be given a maximum credit limit of P10,000. Yet, you can still tap into such benefits as installment schemes, discounts, reward points, and other perks which characterize regular credit cards—depending on the secured credit card you choose.
Using a secured credit card, you’re still expected to make monthly payments, but if you default on a payment, the bank will take out the deposit you put in. So manage your expenses very carefully and make sure this never happens, as it would mean that you won’t be able to use your secured credit card anymore. In addition, your credit history—which you’re improving when using a secured credit card—would be dealt a serious blow.
Generally, a minimum deposit of P5,000 is required. From this amount, your credit limit constitutes between 50% and 90%. This deposit cannot be withdrawn from your account within a year after application. In fact, the only way to retrieve this deposit is to clear and settle your transactions and formally request a card cancellation. From that point on, you should be able to withdraw your cash. This whole process takes generally between one and two months.
Ideally, you probably want your secured credit card to be converted to a regular credit card. The conversion from a secured CC to a regular CC is possible either when you’re capable of showing enough proof of income, or if you’ve been paying your bills on time and in full amount for at least a year. Once you’ve converted your secured CC to a regular one, you can start withdrawing from your deposit without having to cancel the card. Further, your secured CC could help in applying for regular CCs with other banks, as there is an increased chance that your application will be approved if you’re an existing CC holder with a good credit standing.
In the Philippines, you’ve got quite some choices when it comes to secured credit cards. Among these are the following:
|Secured card name||Secured Visa Card||Save & Swipe Program||Express Bank Program||InstaCard|
|Available cards||Visa Classic||Any||Any||Any, except for the RCBC Bankard World MasterCard, RCBC Bankard Visa Infinite Card, and the RCBC Bankard China UnionPay Card|
|Minimum deposit||P12,000||P12,000, depending on the type of card||P10,000, depending on the type of card||P5,000, depending on the type of card|
|Credit limit (%) of deposit||Up to 90%||Up to 90% of your peso account, or up to 80% of your pledged foreign currency account||Up to 80%||Between 60-80%|
As you can see, it differs quite a bit from bank to bank what your options are regarding the available type of cards. While for UnionBank you can only go for the Visa Classic, BPI allows you to pick any of their cards. For the more prestigious cards though, such as their BPI-Ayala Malls Amore Visa Platinum, the deposit you’ll have to put in will need to be significantly higher than the minimum amount of P10,000.
To apply for a secured credit card, you—in most cases—have to visit the bank in person and bring with you the required documentation such as your ID. The approval rate should be close to a 100%—after all, you don’t put in a deposit for nothing. In less than a month you should be good to go and able to use your secured credit card. Apply for a secured credit card now.
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