12 Credit Card Fees in the Philippines to Watch Out For
by Venus Zoleta, on category "Credit Card"
October 9, 2019
This article was originally published on March 5, 2018 and was updated on October 9, 2019.
“Having a credit card is expensive and often leads to unmanageable debt.” Agree or disagree? This is a common concern—and a big misconception—of the average Filipino about owning a plastic card. But credit cards don’t deserve such a bad rep. Just as money isn’t the root of all evil, a credit card in itself won’t drown you in debt. Rather, it’s how you choose and use it.
Whether you already own a card or still looking for one, you should be thinking of ways to avoid—or at least reduce—your credit card fees. This can really help you save money on your credit card bill.
The importance of checking and understanding the fine print cannot be stressed enough when researching your credit card options or applying for one. Take time to understand the credit card payment and fees so you can use your credit card without any problems and avoid unnecessary expenses.
Credit Card Fees: Service Fees for Use/Transactions
1. Annual Fee: PHP 300 to PHP 12,000
The annual fee is the membership fee you’ll pay every year for the convenience of using a credit card. The amount remains the same whether you use your card often or rarely.
How to Avoid Annual Fees
- Apply for or switch to a credit card with no annual fee. Banks like AUB, BPI, Citibank, EastWest Bank, and Metrobank offer some credit cards with a free annual fee for life.
- Get a card with a waived annual fee for the first year. If none of the credit cards with zero annual fee matches your needs, the next best option is a card that doesn’t charge an annual fee for the first year. At least, you’ll save thousands of bucks in a year before you start paying the annual fee.
- Redeem your credit card rewards points for an annual fee waiver. If you’ve accumulated enough rewards points, you can use them to waive your annual fee.
- Contact the bank to request an annual fee waiver. It may be worth asking the bank to waive your annual fee if your card is in good standing and you meet the bank’s minimum spending requirement within a certain period.
2. Cash Advance Fee: 2.52% to 5% of the withdrawn amount or PHP 300 to PHP 600, whichever is higher
Banks charge a service fee every time you withdraw cash from an ATM using your credit card. A credit card cash advance is one of the most expensive credit card fees. Aside from high interest rates, cash advance fees have no grace period. This means you accumulate interest right away until you’ve fully paid the withdrawn amount.
On top of the cash advance fee, your credit card provider may charge an additional fee for over-the-counter cash advance transactions.
How to Avoid Cash Advance Fees
As much as possible, avoid making cash advances, especially for non-emergencies. If you really need instant cash, make sure to pay off your credit card balance to avoid debt and consider alternatives such as low-interest personal loans.
3. Foreign Currency Transaction Fee: 0.85% to 3.525% of the converted amount in PHP
If you use your credit card when traveling abroad, you’ll be charged a percentage of the overseas transaction amount, which is automatically converted to Philippine Peso. An additional 1% assessment fee may be charged by Visa, Mastercard, or another credit card network.
How to Avoid Foreign Transaction Fees
Find a credit card without a foreign currency transaction fee. Security Bank credit cards, for example, don’t have a service fee for overseas transactions. Among the credit cards that do, BPI credit cards come with the lowest foreign transaction fee of 0.85%. Or, pay in cash instead of using your credit card abroad.
4. Balance Transfer Fee: PHP 100 to PHP 250 per approved balance transfer
Transferring your balance to a credit card with a lower or 0% interest rate may help lessen the burden of repaying your debt, but it may also come at a cost. Citibank and RCBC, for example, charge a disbursement or processing fee for every approved balance transfer transaction.
5. Gambling/Gaming/Casino Fee: 3% to 5% or PHP 500 to PHP 1,000 per transaction, whichever is higher
If you use your credit card to pay for gaming or gambling activities (e.g., online betting, buying lottery tickets, etc.) in a casino and any similar establishment, you’ll have to pay a service fee to your bank.
How to Avoid Gambling Fees
Gambling is an addicting habit. The convenience of paying with a credit card and spending money you don’t have at the casino makes the addiction even worse.
Perennial gamblers don’t proactively find ways to avoid shelling out extra bucks to sustain their habit. Concerned family and friends can help these people by monitoring and taking charge of their finances, including credit cards. If the behavior still doesn’t improve, consider canceling the credit card, as gambling is one of the worst reasons to have a credit card.
6. Charge Slip Retrieval Fee: PHP 250 to PHP 450 per request
Sometimes, cardholders request for retrieval of a charge slip or sales invoice because of a dispute, transaction data error, or possible fraud. A service fee is charged for each retrieval request.
7. Card Replacement Fee: PHP 250 to PHP 400 per replacement card
Having your lost, stolen, or damaged credit card replaced comes with a fee. In addition, you’ll have to spend around PHP 150 to PHP 300 for the notarial fee, as banks require a notarized affidavit of loss from clients who request for a replacement of their lost or stolen credit card.
How to Avoid Card Replacement Fee
Keep your credit card in a safe place to reduce the risk of it getting lost, stolen, or damaged. If you’re not using it often, just leave your card at home.
Credit Card Fees: Penalty Fees for Delinquents
1. Late Payment Fee: PHP 300 to PHP 850 or the unpaid minimum amount due, whichever is lower
Making timely credit card payments is just as important as paying your bills in full. Each time you miss the due date, the bank will charge you a penalty fee on your next bill. On top of that, the late penalty fee is added to the finance charge computation, which further increases the amount you’ll have to pay next month.
How to Avoid Late Payment Fees
Avoid a late payment fee by paying your credit card bill on time. Also, pay off your monthly balances as much as you can. If you can’t afford it, pay at least the minimum amount due.
2. Over Credit Limit/Overlimit Fee: PHP 300 to PHP 750 per occurrence
You’ll be charged this fee when you go beyond your credit card limit during a billing period. If a bank doesn’t charge an over-the-limit fee, your transaction will be automatically declined when you exceed your credit limit.
How to Avoid Overlimit Fees
Maxing out your credit card is a big no-no if you’re trying to cut down on your bills. It’s easy to exceed your credit limit that way. Each time you whip out your card to buy something, ask yourself: “Can I afford to pay this in cash?” If the answer is no, then the purchase isn’t worth the trouble.
Also, control your credit card spending. Regularly monitor your billing statements online to ensure you aren’t spending more than 30% of your credit limit.
3. Multiple Payment Fee: PHP 40 to PHP 50 per payment in excess of the maximum transactions
Some banks like RCBC set a maximum of three or four credit card payment transactions within a billing period. When you go over that, a fee is charged on every excess payment.
How to Avoid Multiple Payment Fees
Credit card payments in any of your bank’s branch, online and mobile banking facilities, and ATM are exempted from this fee. So use only the payment channels of your issuing bank when paying your monthly balances.
4. Installment Pre-Termination Fee: PHP 300 to PHP 550 or 2% to 5% of the unpaid amount per pre-terminated transaction, whichever is higher
If you make an advance payment to cancel or pre-terminate your installment plan transaction, the bank may charge you a pre-termination fee.
How to Avoid Pre-Termination Fees
Check with your credit card provider or read the terms and conditions to see if the bank charges a pre-termination fee on its installment program. If it does, just continue paying your monthly amortizations until you finish doing so.
5. Returned Check Fee: PHP 500 to PHP 1,500 for every returned check
Do you make credit card payments through a check? When you issue a check to pay your credit card bills, the bank may return it due to insufficient funds, closed account, or incorrect details. In cases like that, you’ll be charged a returned check fee for the inconvenience it has caused the bank.
How to Avoid Returned Check Fees
Issuing a check to pay for your credit card bill can be a hassle. Avoid issuing checks altogether and use other more convenient channels for paying your credit card bills, such as your issuer’s ATM, online, and mobile banking facilities. You can also pay using your smartphone through mobile payment apps like GCash.
Final Thoughts
An effective way to make your credit card payment easier on the budget is to avoid certain credit card fees, or at least minimize them. Having financial discipline and choosing the right card can help you eliminate some credit card fees from your billing statements. If you’re able to achieve them, you’ll realize that owning a credit card isn’t so bad at all.
Shopping for a new credit card? Make sure to read the fine print. Usually, you can find information about credit card payment and fees on the credit card provider’s website, specifically the Terms and Conditions page.
