Helpful Tips: The Right Credit Card For You

Choosing the right credit card is an important decision.

You can maximize the benefits of owning one with the right credit card. With a wide variety of cards available for you to choose from, an understanding of credit card terms and options will help you choose the one that matches your needs. Making a careful comparison can save you money on interest rates and fees. Below are some guidelines to help you choose the right credit card. 

Types of Cards

Types of Credit Cards	Regular Cards	Premium Cards	Rebate Cards
Description	​Cards that offer only the standard features with no added frills or incentives	​Cards that offer additional perks on shopping, dining, leisure, and travel around the world	Cards where card purchases will have corresponding rebates on services or goods with tie-up companies
​Features	Lower credit limit Higher monthy interest rate Lower or no annual fees	​Higher credit limit Lower monthly interest rate Higher annual fees Added perks, like product warranties, travel insurance, emergency services Associated with prestige since issued only to applicants with higher income and high credit card usage	Gives reward points, such as on airlines, automobile companies, gas corporations Higher monthly interest rate Higher annual fees
Best for	First time credit card owners People who are not interested in availing any incentives or perks People who pay off their balances in full each month	Cardholders who frequently use the perks of the card People who do not pay outstanding balance in full	For individuals who make majority of their purchases on credit People who pay off their balances in full each month

Other types of credit cards include the following:

Niche Cards

These are credit cards designed for a particular group or purpose (e.g. designed for women, designed for online purchases).

Dual Currency Credit Card​

These are credit cards designed for those who use their cards abroad very frequently and have available US Dollars or earn in that currency. It allows transactions in the Philippines to be billed in Philippine Pesos while transactions made abroad are billed in US Dollars.

In choosing a credit card, consider also card payment networks (e.g. American Express, China Union Pay, Diners, Japan Credit Bureau, MasterCard or Visa Card) as it determines acceptability thereof in the merchants/establishments and provides its own perks.

To obtain the least expensive card and maximize the benefits of a credit card, consider how you will use it.

• Do you plan to pay your bill in full each month?
• If you do pay your bill in full each month, the annual fee and other fees will be the most important consideration. Choose a card that has no annual fee and offers a longer grace period.
• If you plan to use the credit card to pay for the purchases over time, and carry over a balance from month to month, the monthly interest rate, method of computing finance charge and base of interest computation must be considered. Choose a card that offers lower interest charge.
• If you plan to often use the credit card for cash advances, choose a card that offers lower cash advance fee as well as lower interest rates for cash advances. Some cards charge a higher interest rate for cash advances than for purchases.

​Make sure to start wisely, shop around, and conduct a credit card research so you can review and compare the credit cards available in the market. Compare the related fees/charges and features and know your rights as a credit cardholder. 

Helpful Tips

• Credit cards are not a form of supplemental income. Credit cards extend credit/loans that must be paid.
• Before using your card, read carefully the Terms and Conditions, most especially the fine prints. Most cardholders encounter problems later on because they do not read the conditions governing their credit card.
• You can enjoy interest-free credit with your credit card. No finance charge is imposed if you pay the Total Amount Due in full on or before the Payment Due Date for a particular billing cycle.
• You can make your big purchases at the start of your statement period to maximize your grace period.
• You can enjoy the full benefit of the grace period if you don’t have any unpaid balance from previous months. It is just like using money FOR FREE for a given period.
• Your card issuer’s method of computing the finance charge makes a big difference in the finance charge you’ll pay. Do understand them.
• You can request for a waiver of annual fee. Your card issuer may waive the annual fee if you maintain a good credit record.
• Consider maintaining only the right number of credit cards. Multiple cards mean checking of multiple statements and due dates and monitoring of multiple credit limits. Maintaining multiple cards is also expensive as annual fees can add up. Having more cards also serve as temptation to more purchases, which could lead to more debts you cannot pay, including finance charges and fees.
• You should pay your bills on or before the due date to avoid late payment fee.
• Keep your cards in a safe place after use, just like you keep your cash.
• Check card when returned by the cashier to ensure it is yours and that it has not been tampered with in any way.
• Check all details on the sales slip before signing/confirming the transaction.
• Don’t sign a blank charge slip.
• Don’t let anyone swipe your card twice without giving you a “transaction cancelled” receipt for the first swipe.
• Don’t fax your credit card number/details. Your credit card information can lie for hours for others to see at the other end. Anyone passing by can record your number and begin to use your card number fraudulently.
• Don’t leave an expired card lying around. Cut the card horizontally to ensure that the magnetic stripe at the back is divided.
• Pay attention to your account balance to avoid exceeding your credit limit. Exceeding your credit limit may either mean additional fees, or merchants declining your transaction. But more importantly, this also negatively affects your credit history.
• Don’t use your credit card to withdraw cash from ATM or for cash advance, as much as possible. This is an expensive form of credit.
• Don’t perform online transactions in public places as in cybercafés.
• Keep a list of your credit card numbers and the card company’s hotline numbers in case of disputes, questions or to report a lost or stolen card.

A friendly reminder, use your credit cards wisely.
Source: Financial Consumer Protection Department (BSP)