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.
It’s the lowest payment the bank requires you to pay by the monthly due date. Computation of the minimum payment varies per bank. It can include a percentage of your outstanding balance and installment amortization, plus your overdue amount (for late payments) and over credit limit amount.
While paying only the minimum amount due each month seems easy on the pocket, it will be costly in the long term because of the higher interest. Pay the full balance as often as you can.
How much it will cost you: 3% to 10% of the total outstanding balance
It is the interest that will be charged to you if you carry over a balance from the past month. Credit card providers in the Philippines compute finance charges using either the average daily balance or previous balance method. Your finance charge may be higher if your issuing bank uses the previous balance and you’re carrying a credit card debt.
How much it will cost you: 2% to 3.54% of the overdue amount and outstanding balance each month until your balance is fully paid.
How to avoid it: Pay your monthly credit card bills in full and on time. Also, avoid paying only the minimum amount due if your budget permits it.
This 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 much it will cost you: PHP 300 to PHP 6,000
How to avoid it: Look also for credit cards with no annual fees for life. Or go for a credit card with a waived annual fee for the first year, so you can save money as a new credit cardholder. Some banks don’t charge an annual fee for meeting the minimum spending requirement. Cardholders may also enjoy waived fees as a reward for accumulating points.
Banks charge a service fee every time you withdraw cash from an ATM using your credit card. On top of the cash advance fee, your credit card provider may charge an additional fee for over-the-counter cash advance transactions.
How much it will cost you: 3% to 5% of the withdrawn amount
How to avoid it: Cash advance fees have high interest rates, and they have no grace period. As much as possible, avoid making cash advances. If you really need instant cash, make sure to pay off your credit card balance to avoid debt.
When you use your credit card 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 much it will cost you: 1.75% to 2.50% of the converted amount in PHP
How to avoid it: Find a credit card without a foreign currency transaction fee. Or pay in cash instead when shopping abroad.
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. Before you avail of a balance transfer promo, make sure that the balance transfer fee won’t cost you more than the lower interest payment.
How much it will cost you: 8% to 18% per year
If you use your credit card to pay for gaming or gambling activities (e.g., buying lottery tickets) in a casino and any similar establishment, you’ll have to pay a service fee to your bank.
How much it will cost you: 5% of gaming or gambling transactions
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.
How much it will cost you: PHP 250 to PHP 300 for every request
Having your lost, stolen, or damaged credit card replaced comes with a fee.
How much it will cost you: PHP 250 to PHP 400 per replacement card
Banks impose a penalty when you don’t pay at least the minimum balance by the due date. The cost looks minimal, but it’s included in the finance charge computation, which leads to a higher credit card balance on your next bill.
How much it will cost you: PHP 300 to PHP 750 or 2.25% to 8% of the total amount due, whichever is higher
How to avoid it: Pay off your monthly balances as much as you can. If you can’t afford it, pay at least the minimum amount due.
You’ll be charged this fee when you go beyond your credit 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 much it will cost you: PHP 500 to PHP 1,500
How to avoid it: Monitor your credit card spending and billing statements regularly to ensure that you won’t exceed your credit limit.
Some banks set a maximum of three or four credit card payment transactions within a billing period. When you go over that, a fee is imposed on every excess payment.
How much it will cost you: Around PHP 50 for each payment in excess of the maximum transactions
How to avoid it: 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.
If you decide to cancel or pre-terminate your installment plan transaction, the bank may charge you a pre-termination fee.
How much it will cost you: PHP 300 to PHP 500 for every pre-terminated transaction
When you issue a check to pay your credit card bills, the bank may return it due to insufficient fund, 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 much it will cost you: PHP 100 to PHP 1,000 for every returned check
How to avoid it: Avoid issuing checks altogether and use other more convenient channels for paying your credit card bills.
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.