How to Apply for Credit Cards in the Philippines

how to apply for credit cards in the Philippines

If it’s your first time applying for a credit card, you may not be aware that banks have stringent requirements when it comes to credit card applications.

Here’s a simple guide on how to successfully apply as well as how to maximise your first credit card as a principal holder. Just make sure you don’t overspend on your credit limit!

Who’s eligible for a credit card in the Philippines?

You need to have a stable income and a regular job to prove that you’re able to pay your dues. Most banks will require a COE (Certificate of Employment) validating that you’re a regular employee of a company, ITRs (Income Tax Returns), and pay slips.

For self-employed and business owners, you also need to show that you have a regular cash flow. Banks will require you to submit business documents and financial statements. One to two years of ITRs can validate credibility as an applicant.

What are the eligible age and minimum income requirements?

A native Filipino, principal cardholder must be 21-70 years of age with a gross annual income range from P120,000 up to P1,000,000, depending on the type of credit card you want to avail.

Foreigners who want to apply may have different eligibility and also requirements.

What is your credit limit as a cardholder?

Banks provide a credit limit according to your discretion on how much is assigned on your card.

You can charge your credit card at a maximum of a certain limit, including the cash advances you withdraw if you want to borrow using your card. It also includes the penalty fees, finance charges, and purchases.

In a nutshell, it’s the total amount you are given that you can spend. The higher the credit limit you have, the more you can charge on your card. Call this your “purchasing power” – but it’s important to keep track of your expenses.

How can you increase your credit limit?

If you want to increase your credit card limit, you need to provide supporting documents, and it’s still the bank’s discretion based on their assessment if you’re eligible. The processing could take days or weeks depending on the bank, so it’s best not to assume that a last minute request to increase your limit will be granted by the time you require the additional funds.

In order to give yourself the best chance of increasing your limit, be a responsible holder and pay your dues on time (to build a good credit history) and avoid maxing out your credit limit Your spending habits using your card can make or break the approval’s bank in the future.

What if your card application was declined? A secured credit card is an option

If your application was rejected, you could avail the secured credit card at your local bank. This is a great way to build your credit history, too, in case you’re still starting your business, or you’re still under a contractual stage at your company.

If you’re a long-time depositor of your bank, there’s a higher chance of getting this type of card.

You are required to deposit a fixed amount as collateral, and a certain per cent of that amount will be your credit card limit. Once you close or terminate that secured credit card, the bank will automatically deposit the money into your regular savings account.

For example, if you’re just starting as a self-employed freelancer and lack financial documents like the ITRs and pay slips, you can apply for a secured credit card.

Most banks are wary of the term “online business” when you disclose the nature of your business. They may not see you as a credible card holder for now.

However, you can manage your online purchases when you use this type of card. You still get to enjoy the perks of a normal credit card, but a deposit is required. If you deposit P10,000 in your account, and 80% of that is on hold, which is P8,000.

That’s your credit limit, which is an advantage for you, too, because you can still control and manage your online operating expenses such as subscriptions, servers, and among others.

You can use this card for about a year or two to build a good credit history. From there, you have higher chances of applying to other banks with credit cards that have low monthly interest rates.

How to choose the best credit card in the Philippines?

credit cards for shopping in the philippinesTo make sure you’re choosing the best credit card that suits you, consider these three things: the credit card network, spending habits, and the benefits or rewards you get from the credit card.

In the Philippines, the credit card networks are Visa, Mastercard, UnionPay, JCB, and American Express. Visa and Mastercard are the popular ones with lower fees for local transactions, while UnionPay and American Express have lower fees for overseas transactions.

Credit Card Network

The credit card network simply decides how your card can be used as merchants, and retail stores often accept Visa or Mastercard. Think of them as the “middlemen” between the merchants and banks that provide the card.

In short, Visa and Mastercard networks are accepted in major establishments nationwide and also for online purchases and overseas transaction.

If you are dealing with cross-border transactions in China or always travelling in China, UnionPay is a good option. While American Express is for your overseas purchases, which you can take advantage of the perks.

Spending Habits, Benefits, and Rewards

Some credit cards offer more cash rebates and rewards based on spending habits. Frequent drivers on the road are likely to get more fuel rebates and discounts using any of the Petron or Shell credit cards. It’s the same thing for those who are shopaholics.

They’d get more rewards from credit cards that provide more perks and loyal points for frequent spending.

What type of Credit Card Benefits Should You Avail?

Your judgment on which credit card to avail can also be based on your lifestyle and spending habits.

Cashback – these types of cards often have a minimum requirement of spending to avail cash rebates. First-time holders that have low expenses can take advantage of these types of cards.

Fuel Rebates – frequent travellers on the road can enjoy fuel rebates and discounts. Other credit cards offer cashback, but with a minimum requirement of spending.

Shopping – you’ll enjoy rewards, like freebies, double points, and rebates if you meet the minimum spend amount. Local merchants and retail stores often partner with banks and provide discounts for holders.

Airmiles & Travel – for frequent “flyers” and travellers, you can earn air miles whenever you spend. Some credit cards offer up to 4x points, and others offer welcome bonuses or rewards, so you earn air miles.

Keep in mind that these cards have stringent income requirements, typically more than P250,000, but there are also exceptions, too.

What are the credit card fees you need to know?

If you’re a credit card holder, you also need to keep in mind the fees you need to pay on a monthly and annual basis.

Annual fee – think of this as your subscription fee for the card. Some credit cards have free annual fees but require higher income range. Fees range at least P1,200 up to P5,000 (for premium cards).

Late payment fee – if you didn’t pay your minimum balance by the due date, you need to pay the late payment fee that typically ranges from 2.25% to 8% of the total amount due. Some cards have waived late fees on the first year, but of course, you may want to avoid this to make sure you have a good credit history.

Over-the-limit fee – when you exceed your credit limit, you are also going to pay for that fee that ranges from P500 to P1,500. Some banks, if you exceed your limit, would decline the transaction. This fee is also included in your monthly dues.

Cash advance fee – when you withdraw cash using your credit card, you are technically borrowing money from the bank. The fee is around 3-5% of the amount you borrowed or other cards charge about P500 or more.

Finance charge – when you only pay the minimum amount due to your credit card, you are subject to monthly interest rates that range from 2 to 3.54%. To avoid these charges, better pay in full before the due date.

With all the information you get above, you now realised that applying for a credit card in the Philippines requires you to be a good steward of your finances and responsible in paying your total bill before its due date. Remember to spend moderately once you’re approved.