Need some help?
No worries, we've got you covered!
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 you swipe or tap your credit card on the payment terminal. 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 payment terminal will print the receipt containing the transaction data. Usually, you’ll be asked to sign the receipt but some cards don’t require a signature if your purchases are below ₱2,000. 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 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.
- 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.
- 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.
- Cash Back 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, cash back credit cards are the most suitable for money-savvy shoppers.
- 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.
- 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 with 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.
- Pick the best credit card for your needs, lifestyle, and budget.
- Go to the nearest branch of your chosen credit card provider.
- Fill out and sign an application form.
- 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 increase your chances of approval by keeping these helpful tips in mind:
- 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.
- Prove that You Have a Stable Source of Income
You may have the impression that having a big, fat paycheck warrants easy approval of a credit card application. It’s true to some extent. But what banks 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.
- 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.
- 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.
- 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.
- 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.
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 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.
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 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.
Making only the minimum payment is not the best way to pay the bills! If you just make the minimum payment on the credit card, the bank would charge you compound interest, which means you might owe more and more money and carry long-term debt. Cardholders are recommended to assess their repayment ability before using their credit cards, and pay off all outstanding debt as soon as possible.
In the past, most people think we should not own too many credit cards, as it might lead to over-consumption or missing payment. With the development of modern society and more credit card offers, many of us own several credit cards for various purposes, such as one for overseas spending, one for earning Asia Miles, and the other one for monthly instalments.
Please note that if you always pay your credit card bill after the due date while owning many credit cards, your credit score could drop, which is likely to affect your credit card, mortgage and loan application.
To protect yourself from credit card fraud, you should keep your credit card and personal information (including credit card numbers and security code) safe and never disclose your passwords or personal information to anyone. You should also keep record of all credit card transactions and check bank statements regularly. Report any suspicious transactions to your financial institution or bank immediately to avoid financial loss.
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