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MoneyMax.ph's Guide to Credit Cards in the Philippines
A credit card is a card that enables you to loan from financial firms to shop for items such as food, clothing and gadgets. It may also be used for shopping online, paying for your meals, booking flights, paying for petrol, and paying for your utility bills. Some people reserve use of their credit cards for more expensive purchases such as cars, a trip across the globe, and other items that would normally take them months to save before they can purchase. With credit cards, banks simply lend you money you don't currently own so you can buy what you need immediately and delay paying for it by a month. You can pay for your purchases later on through several monthly instalments until you complete your payments and zero out your outstanding payment balance.
People apply for credit cards because of the convenience credit cards provide and the "instant gratification" it offers its owners. Credit cards offer instant gratification because when you own one, you can buy what you want to buy spot-on, without having to wait for the next pay day to save enough funds. Consequently, some credit card holders apply for credit cards to accumulate reward points, cash back benefits, discounts and other free promotional items that comes with signing up for a credit card. On the other hand, a big number of Filipinos also choose to apply for a credit card so that they will have an "emergency fund" they can count on in case of accidents, sicknesses or unexpected expenses such as car, home or gadget repairs. To know more about credit card terms, you might want to look at our glossary.
  1. Pick an item.

  2. Figure out how you are going to pay for it on a monthly instalment basis until you complete your payments.

  3. Give your card to the cashier to finalize your payment.

  4. The cashier will then print the receipt and give it to you together with your card.

  5. Check the amount charged. If it's correct, sign the two copies and give one copy back to the cashier.

  6. Keep your copy and place it in your purse to keep track of all your credit card transactions.

  1. Make sure that the merchant you are dealing with is a credible and trustworthy before making a transaction.

  2. At the payment and check-out page, check to see if the merchant's site is secure by looking for https:// at the beginning of their website URL.

  3. Always examine your credit card monthly billing statements to check for any errors or suspicious activities that may not have your authorization.

  4. Don't send your credit card details through e-mail to prevent hackers and malicious programs from making fraud transactions using the details you have stored in your e-mail account.

To apply for a credit card, follow these simple steps:

  • Research

    Before you get a credit card, be sure that you have a clear idea on what you plan to do with it. Also try to decide which type of card suits you best. Do you want a card to increase your purchasing power? Do you hope to get a credit card so that you can accumulate reward points and get cash back benefits and claim other free promo items? Or do you want to own a credit card that will be used for your business? List down a number of questions you want to know about credit cards and ask them to credit card sales officers. You should also ensure to look into annual fees, late payment fees, how long it will take before interest rates will apply, when a payment is due, and other matters which are often hidden in the fine print. Remember to compare the advantages and disadvantages of each bank's credit card and weigh out everything in your head so that you can make a wise decision on which card will work best for you.

  • Prepare for credit history background check

    Banks will want to know if you have the ability to pay the monthly instalment fees. Be prepared to have your credit history checked. When banks have learned that you have a good credit score and that in the past you have paid your phone, internet, electric and other bills on time, your chances of having your credit card application approved will vastly increase. Credit history also includes the loans you have made in the past. Other than your credit history, banks will also want to know how much you are earning per month, what you do for a living, and how old you are.

  • Decide on how you want to apply for your credit card
    Once you have chosen the bank where you plan to apply for a credit card, the next question is how you can apply for your credit card. The most convenient and fastest way nowadays is online, where our credit card comparison portal can help you out with.

  • Double check everything before submitting requirements
    To avoid the hassle of the bank officer returning you your form to re-fill and to avoid rejection of your application, make sure that you double check everything to see if you have missed any fields or if you have misspelled and forgot to include certain details. Checking your application twice can save the time it will take to make errors and have to resubmit requirements again. To know more about credit cards, visit our Frequently Asked Questions page.

To be able to apply for a credit card, you will need the following:

  • Application form

  • Photocopies of 2 valid government-issued identification card you own (Voter's ID, TIN ID card, SSS ID, Passport, driver's license)

For employee applicants:

  • Most recent payslip

  • Certificate of Employment

  • Latest Income Tax Return/ BIR stamp or form 2316

For self-employed applicants:

  • Copy of DTI or SEC registration

  • Latest audited financial statements with bank/BIR stamp

  • Latest Income Tax Return with bank/BIR stamp or form 2316

For foreign applicants:

  • Philippine VISA

  • Alien certificate of registration stating type of Visa held

  • Immigration Certificate of Residence(ICR)

The maximum amount you can borrow or spend on your credit card or maximum credit card limit should depend on the type of credit card you have applied for. Once your credit card application has been approved, you can call and ask your sales officer about your maximum credit limit and other details you may want to know.

Credit cards are usually divided into different categories. Here are some of them:

  1. Classic Credit Cards
    These are the most basic types of credit cards which provide card holders with their basic need of having extra money and extending their funds in case of emergencies, or when they are still waiting for their other sources of income to arrive.

  2. Premium Credit Cards
    Among the premium cards on offering are Platinum, World and Infinite cards. Premium cards require applicants to have high credit scores, and will only be granted to individuals with a certain amount of income as a minimum requirement. This type of card is subject to higher charges than their regular counterparts, but also offer more benefits. Among the benefits they offer are extensive reward programs, in which you can use can use accumulate points to purchase items, have your annual fees waived, and more. Also freebies, discounts on selected items, hotel accommodation upgrades, travel perks, and many other advantages belong to the benefits on offering.

  3. Lifestyle Cards
    Lifestyle cards are personalized and created to accommodate to a certain lifestyle. These cards include credit cards that are personalized for shopping and credit cards that are created specifically for loading up on gasoline stations.

  4. Business Credit Cards
    Business credit cards cater to those who need to use their cards for business transactions such as flying out of the country for business trips. Business credit cards offer air mile benefits and cash back points.

    Get more details about these cards from any of these banks:

Upon getting approval for your credit card, you should be aware of the fees involved. Here are some of them:

  1. APR
    Also known as Annual Percentage Rate, you get this charge when you don't pay your monthly bill charges in full. When you missed paying your dues for the month, your balance will be carried to the next month, which will then result in paying interest for the outstanding balance. When not closely monitored, the APR can balloon to more than 40%. That is why it is most advisable to always pay your bills in full each month even if only a minimum payment is required so as to prevent incurring any interest in the future.

  2. Annual Fees
    To continue enjoying the benefits your credit card, you are required to pay a fee for every year of use. Some credit card companies waive annual fees for the first year. In this case, you will start paying when your credit card reaches the second year. Fees start from P1,000 and can range to P5,000.

  3. Balance Transfer Fees
    If you have previously applied for a credit card and the interest rate is high, and you want to lower your interest rate to zero, you can use a balance transfer to a new card. You can also use balance transfer if you have a number of credit cards in possession, as this will enable you to continue paying for your outstanding balance using just one credit card. Balance transfers usually charge a minimum fee of around 2% depending on how much you want to transfer. Keep in mind though that the amount you plan to transfer will be limited by the credit limit on your new card.

  4. Cash Advance Fees
    There may be times when you need cash to pay. When you withdraw cash from your credit card account at an ATM machine, the interest rate could go up to 4% of the amount you have withdrawn or charge a fixed fee for your transaction - whichever is higher. When thinking of making a cash advance, you should also remember that you will be charged additionally depending on how long it will take you to repay the cash starting from the date of your withdrawal. As such, it never advisable to take on a cash advance using a credit card.

  5. International Transaction Fees
    Using your card when you travel to other countries will also mean additional charges. To prepare for any additional charges, it is best to call your bank to ask about international transaction fees associated with shopping, dining and other expenses you will make using your credit card. International transaction fees are usually just 3%, but if you use it frequently, your bill can also increase quickly.

  6. Overlimit Fees
    Had too much fun with your credit card? Exceeding your card's credit limit also translates to extra charges. Even when you exceed your limit just by a couple of pesos, you will still be charged an estimated amount of P500. To avoid unnecessary fees, stick to your credit limit and control your spending habits.

  7. Underpayment Fees
    Should you forget to make your minimum monthly payment, you will incur an underpayment fee on top of the usual interest rates you usually get. Underpaying will cost you around P500 in general.

The key thing to remember about these fees is that certain credit card companies have them, and that credit card company officers don't tell you everything you need to know. Be sure to read all the details and consult a finance person so that you will have a clear idea on exactly how much you need to pay for your credit card monthly instalment.

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