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A credit card is a small plastic card that allows you to spend money via credit to pay for goods or services at local and international stores. It is one of the more convenient, more flexible, and safer payment alternatives to cash and checks. But how exactly can this piece of plastic give you credit?

The process begins when the cashier swipes your credit card on their machine. This will transmit your credit card information to the store’s acquiring bank for validation. If the store’s acquiring bank deems your credit card valid, it will approve your purchase and add it to your overall credit.

The cashier will print the receipt containing the transaction data and you will then be asked to sign it. Signing on the receipt means you agree to pay the amount you owe to your issuing bank.

Your issuing bank will consolidate the credit card charges you made into a statement and send it to you every month. You can pay the minimum amount due, but it is better to pay your credit in full before the due date to avoid extra fees.

The same process also applies when you provide your credit card credentials to online shops. In a nutshell, using a credit card means paying with the money you don’t yet have. It’s the concept of “buy now, pay later,” if you will.

There are many types of credit cards in the Philippines, each with its features and perks. Here are just some of the most common types out there so you can start to compare credit cards.

• Rewards Credit Cards offer incentives in the form of exciting rewards. These cards earn you rewards points for every purchase you make with your credit card.

• Cashback Credit Cards offer rebates as an incentive for using your credit card. You can then use your rebates to save money or pay off your credit card balance. Out of all the credit card types, cashback credit cards are the most suitable for money-savvy shoppers.

• Air Mile Credit Cards earn you air miles for every purchase made with your credit card. Apply for this credit card if you want to use air miles to book free flights here and abroad.

• Travel Credit Cards offer exclusive travel perks aside from earning you air miles. The usual perks include free travel insurance, airport lounge access, and others.

• Shopping Credit Cards offer discounts and exclusive deals for shopping in-store or online. Usually, these cards are co-branded by famous companies. If you love supporting a specific brand or service, these are the credit cards to apply for.

• No Annual Fee Credit Cards are perfect for first-time credit cardholders because these cards don’t require annual fees to use. Apply for a credit card with no annual fees if you don't want the additional hassle that comes with owning one.  

• At least 21 years old
• Filipino citizen or foreigner living in the Philippines
• Home, office, or business location near a branch of the issuing bank
• Active landline number or mobile phone number
• At least 1 year of regular employment status or at least 2 years of profitable business for self-employed individuals
• Minimum gross annual income ranging from ₱120,000 to ₱1 million

Before you can start your credit card comparison in the Philippines, make sure you have your documents ready. The exact requirements may vary depending on the credit card provider, but here are the most common credit card requirements:

• Completed and signed credit card application form
• Valid ID bearing credit card applicant’s photo and signature
• Employed applicants:
  • Latest BIR form 2316
  • Certificate of Employment
  • Latest payslips of up to 3 months
• Self-employed applicants
  • Latest BIR form 1701
  • Latest financial statements
• Foreign residents:
  • Alien Certificate of Registration or 
  • Immigrant Certificate of Registration
  • Work Permits

When you’re applying for a credit card for beginners, expect a straightforward process. You can apply in person at a branch of the issuing bank. For your convenience, you can also apply online from your chosen credit card provider’s website.

1. Pick the best credit card for your needs, lifestyle, and budget.
2. Go to the nearest branch of your chosen credit card provider.
3. Fill out and sign an application form.
4. Submit photocopies of the required documents. The bank staff may ask you to present the original copies for verification.

Processing of a credit card application, which includes credit history checks and verifications, can take two to three weeks. Feel free to contact your bank for a follow-up or check your credit card application status online. Upon approval, your new credit card will be delivered to your home or work address.

Before you can start to compare the credit card you want to others, know that you can actually increase your chances of approval by keeping these helpful tips to mind:

1. Settle Outstanding Debts

When you apply for a credit card, you're essentially borrowing money, which means it’s best to eliminate any outstanding debts under your name. Make a good impression on credit card providers by proving you’re a responsible applicant who can maintain a good credit score.

2. Prove that You Have a Stable Source of Income

You may have this impression that having a big, fat paycheck warrants an easy approval of a credit card application. It’s true to some extent. But what banks actually check is the stability of your income stream.

You can prove that you have a stable source of income by presenting these essential documents: Certificate of Employment for employed applicants and business registration and ITR for self-employed applicants.

3. Open a Savings Account

This is ideal for anyone without a stable source of income, particularly freelancers and students. Open a savings account with the bank where you’re planning to apply for a credit card so you can easily get approved for a secured credit card.

4. Review the Requirements

Before you apply for a credit card online, make sure you’re eligible for it. Review all requirements and be ready for any additional documents the bank might ask from you. Go above and beyond and prepare the documents you think can help you get approved.

5. Choose a Cheaper Credit Card

If you apply for a cheaper credit card, there’s a big chance the requirements are a lot easier as well. Aim for a credit card that your budget can maintain. If possible, compare credit cards with lower interest rates or waived annual fees.

6. Learn How Not to Get Rejected

You can also increase your chances of getting approved by knowing the common reasons for rejection and trying your best to avoid them. Learn from the mistakes of others and adjust your strategy accordingly.

Yes! As to how to apply for a credit card online, you can apply through the bank’s website or through online comparison platforms like Moneymax. Don’t forget to compare credit cards and their rates, perks, and other features before you send your credit card application. Here are the common steps for online credit card application:

1. Visit the bank’s website.
2. Fill out the online application form and choose your preferred credit card type.
3. Upload scanned copies or clear images of the required documents to the online form. You can also send them to the bank via email.
4. When you have completed the form, click the Submit button.

It depends on the bank you applied from. After submitting your credit card requirements, some banks might take a week or two to process your application. Other banks can be as fast as three to five days, while virtual credit cards like the Metrobank ON Virtual Mastercard can be processed in as fast as 48 hours.

Most cardholders use them to pay for products and services such as grocery items, utility bills, and airline tickets. Some cardholders, however, use them to build a good credit score and earn credit card rewards. Make sure to apply for a credit card that suits your lifestyle so you can use it to your advantage.

Apart from the printed monthly statement of account, you can check your credit card bill via online banking, mobile banking, and e-mail. As for the credit card payment, you can pay your credit card balance over the counter, online, or via payment centers like Bayad Center, Cebuana Lhuillier, and SM Bills Payment.

Credit cards come with corresponding fees, but you can avoid some of them when you use your credit card responsibly. Here are the most common fees to remember before you apply for a credit card online:

• Annual Fee - the yearly charge for using your credit card
• Finance Charge - the interest rate added to your credit card expenses
• Late Payment Fee - additional charge for late credit card payments
• Over the Limit Fee - the payment when you max out your credit card
• Cash Advance Fee - additional charge for taking out a cash advance

Many things could happen if you don't pay your credit card bill. First, you can easily build up credit card debt. When you skip a payment, your unpaid balance will go over to the next billing cycle, which will then include a finance charge and a late payment fee. This can also lead to a bad credit score, which will jeopardize your chances of getting a new credit card. And more importantly, you’ll end up losing your credit card perks.

Banks conduct credit evaluations when deciding an applicant's credit limit. To accurately determine your creditworthiness, banks consider a variety of factors such as your income, credit history, and debt-to-income ratio.

• Sign the back of your card. This is for your own security and convenience.
• Activate your credit card. Your new card comes with instructions to activate your credit card. It usually involves calling the bank’s hotline or sending an SMS.
• Link your credit card to your banking app. Monitor your credit card transactions and view your monthly billing statements on the go with your preferred banking app. You can also schedule your credit card payments online to avoid missing a due date.
• Read the terms and conditions. Make sure to read and understand the fine print before using your new card. Take note of the credit limit, rewards, and other benefits, as well as the annual fee, finance charge, and other credit card fees.
• Store it in a safe place. Put your card in your wallet if you’ll use it often. You can also place it in a secure drawer at home if you’ll only use it for emergencies.

Just because you were denied a credit card doesn't mean you can't be approved the next time. To increase your chances of approval, wait at least three months to re-apply. This is to avoid hurting your credit score and also give you enough time to compare credit cards until you find the right one for you.