Is getting your first credit card a part of your #adulting goals? That plastic card can be a great tool for building your credit history and managing your finances as a young professional. But don’t dive into it yet without doing your homework. Here’s a simple credit card guide for beginners on how to get a credit card for the first time.
Tips on How to Get a Credit Card for the First Time
Know what it takes to get the right credit card for the first time. Take note of these reminders before applying for one.
1. Check If You're Qualified
A credit card application is like a typical job application that requires applicants to meet certain minimum qualifications so that they’re eligible to apply. With that, banks impose minimum requirements on age, income, employment/business operation status, and others for credit card applicants.
Minimum Eligibility Requirements for First-Time Credit Card Application
Here are the common eligibility requirements for first-time credit card applications:
- Age – At least 21 up to 65-70 years old
- Citizenship – Filipino (for most banks) and foreigners living in the Philippines for the past two years
- Gross annual income – At least PHP 120,000 to PHP 252,000 (for basic credit cards)
- Contact number – An active residence or business landline number and mobile number
- Valid Taxpayer Identification Number (TIN)
- Employment/Self-employment status – At least one-year regular employment or at least one to two years of profitable business operation/professional practice
If you’re too young to qualify for a credit card, you may still be eligible for a supplementary credit card, as long as you’re at least 13 years old. You can get one if your older family members apply for a primary credit card and enroll you for a supplementary card.
If your income falls below the bank’s threshold, you can easily get approved for a secured credit card that doesn’t have any income requirement. However, you need to open a savings account with the bank and deposit at least PHP 10,000 that will serve as your collateral.
2. Choose Your First Credit Card
To make it easier for you to find the best choices, look for certain qualities in a credit card. First and foremost, your first credit card must be something you can afford to own.
Consider these important factors when shopping for a credit card in the Philippines:
- Annual fee - The membership fee you pay for the convenience of using a credit card. Many starter credit cards have waived annual fees for the first year, so you can save money as a new credit cardholder.
- Interest rate or finance charge - The interest that will be charged when you carry a balance over from the past month
- Penalty fees - The bank charges a late payment fee when you don’t pay at least the minimum balance by the due date. You also have to pay an over credit limit fee when you go beyond your credit limit. If the bank doesn’t charge it, your transaction will be automatically declined when you exceed your credit limit.
- Rewards program - Redeemable points for every amount spent using the credit card, including cash back rebates, annual fee waivers, gift certificates, and air miles. Note that credit cards with very low annual fees or interest rates usually don’t offer rewards.
- Eligibility requirements - The minimum age, income, and other requirements to qualify for a credit card
The best choice for credit card beginners is one with a low annual fee, interest rate, penalty fee, and income requirement. Starter credit cards that offer good rewards programs are also worth considering.
Types of Credit Cards Suitable for Beginners
A credit card appeals to a specific type of users who share the same budget range, interests, lifestyle, and financial needs. This is why there are various credit card types in the market that appeal to different types of users.
Before going through the steps on how to get a credit card for the first time, you must inform yourself of the following cards first.
1. Basic Credit Cards
Sometimes called classic or standard credit cards, basic cards are the easiest to qualify for because of their low minimum income requirement. Some examples include the Bank of Commerce Classic Mastercard and the PNB Visa Classic. They're among the most affordable to own, too, as they usually come with lower annual fees compared to premium cards. Basic credit cards are also considered the no-frills type because they don't offer rewards.
A basic credit card is ideal for those who just want a simple card for daily and big-ticket purchases and are not interested in earning rewards.
2. No Annual Fee Credit Cards
A credit card that automatically offers free annual fee for life is a great first credit card for beginners. Because the annual fee is waived forever, it allows you to save money on credit card fees. Example of this type of credit card are the Metrobank M Free Mastercard and the AUB Classic credit card.
3. Rewards Credit Cards
A rewards credit card earns points per qualifying purchase made using the card. When you've accumulated rewards points, you can redeem them for gift certificates, cash rebates, air miles, annual fee waiver, or any perks included in the credit card provider's rewards catalog. If you're interested in this type of credit card, you can explore the Citi Rewards Card or the RCBC Flex Visa.
4. Cashback Credit Cards
If earning credit card rewards don't appeal to you, perhaps a cashback will. A credit card that earns a percentage of cashback or rebate on eligible purchases allows you to save as much as PHP 1,000 monthly. Typically, cash back earned for a month is credited to the credit card bill for the next month, so it lowers your total amount due for that month. Check out the Robinsons Cashback credit card or the Unionbank Platinum Visa to see how a cashback credit card works.
5. Travel Credit Cards
Travel credit cards are a special type of rewards credit card that help cardholders save money on travel-related expenses such as airfare and hotel accommodations. These cards offer points or air miles that can be redeemed for free flights or hotel stays. HSBC Platinum Visa and UnionBank Miles+ Platinum Visa are examples of great travel credit cards.
6. Co-Branded Credit Cards
If you always buy from a particular brand or store, a co-branded credit card that's linked to that brand is your best bet. It can help you maximize your savings when using the card. Plus, you'll enjoy rewards, freebies, and other privileges as a cardholder.
Here's the summary of the credit cards mentioned above:
Comparing Credit Cards
The sheer number of options in the Philippine credit card market can be overwhelming for newbies. Doing your legwork before choosing the right credit card is a must.
But if you don't have much time and patience to shop for credit cards, you can save yourself the trouble and use the Moneymax credit card comparison platform instead. It's a free and easy-to-use online tool that lets you compare credit cards in the Philippines in just a few clicks.
3. Prepare the Required Documents
Once you've picked the most suitable credit card for you, prepare the usual requirements for a first-time credit card application. Go for a credit card with easy application requirements to expedite the whole application process. This will also save you a lot of time and energy.
4. Apply for a Credit Card
The most convenient way to apply for a credit card is to do it online. Many banks nowadays enable credit card applications over the internet.
How to apply for a credit card online:
- Go to the official website of the issuing bank and look for its online credit card application facility.
- Fill out an online application form, making sure that you provide complete and correct information to avoid processing delays.
- Take photos of your supporting documents and attach them to your online application.
- Submit your credit card application.
You may opt to apply for your first credit card at the nearest branch of your chosen bank. You'll have to fill out the application form on-site and submit your documents to the bank teller.
What to Consider Before Getting a Credit Card for the First Time
Getting a credit card requires you to do your due diligence and to be prepared. You have to look into different considerations carefully so that in the end, you won’t regret that you’ve chosen to get a credit card. Here are some of the things that you need to mull over:
1. Ask Yourself if You Really Need It
The most important thing that you’ll have to do is to determine if you really need a credit card. Are you building your credit history so you’ll be able to qualify for a home loan in the future? Do you need a purchasing tool to tide you over in case you’re short on cash? Are you a frequent flyer who may save a lot on plane tickets if you use a credit card while earning miles and rewards? These are some questions you need to ask yourself.
Generally, people apply for a credit card to build their credit score. But if you have a healthy cash flow and you’re not in need of a loan that requires a credit score, you’re better off living without the shiny plastic card.
2. Don’t Overlook the Rates and Fees
It’s a good thing that banks and credit card companies disclose their cards’ rates and fees. You can take a look at these pieces of information to plan your application and your budget should you decide to go for a specific credit card. Other than charging annual fees and interest, banks may require you to pay for certain credit card services, such as foreign transactions, cash advances, and balance transfers.
While you’re at it, know that some fees are actually avoidable. For example, you can do away with paying foreign transaction fees by not using your card when you’re abroad. You can also take advantage of banks’ 0% balance transfers during specific periods.
3. Be Careful of Promos
Banks and credit card companies constantly bombard prospective credit cardholders with enticing promos. Some may even send you a credit card that you can readily activate, complete with a brochure with all its exclusive benefits.
But don’t be easily swayed by these promos, especially if they seem too good to be true. Chances are, these perks come with fees, charges, or conditions related to credit card spending.
So, before you give in to these handsome offers, read the fine print or the rewards booklet carefully. Don’t hesitate to probe your credit card sales agent if some things aren’t clear to you.
4. Consider Getting a Credit Card from Your Current Bank
Getting a credit card from your current bank has a lot of pros. Primarily, the application process can be much easier. If you have the bank’s app, you can apply for a credit card straight from the app. It will also be convenient for you in the long run since you can manage your credit card transactions using the same app. No need to download a new app and go through a learning curve!
5. Ask for Advice
Since it’s your first time to use a credit card, your head will definitely be swimming in a pool of questions. It won’t hurt to ask your family and friends about their credit card experience. Listening to their stories will help shape your expectations and keep you grounded when it comes to making your credit card application decisions.
They may even share some tips and tricks that will help you maximize your card. You may hear a few anecdotes on mismanagement, too, which can enumerate credit card habits you need to avoid.
What to Do If Your First Credit Card Application Got Declined
The first and most important thing to remember when you don’t get approved the first time: Never lose hope. Getting your first credit card application rejected doesn’t mean you’ll never qualify for a credit card ever again.
But don’t make yourself appear too desperate—wait for at least three to six months before you apply again for a credit card with another bank. Take that time to work on improving your credit score and find a credit card that suits you more. This way, you can boost your chances of getting the bank’s approval for a credit card.
How to Get Approved for a Credit Card in the Philippines
Whether it’s your second time to apply or you’re just submitting your requirements for the first time, your actions before you apply for a credit card will determine your success. Here are some things you need to do to up your chances of getting approved for credit card
1. Stay Employed
Applying for a credit card for the first time means that you understand the forthcoming consequences, namely debts. And the easiest way to pay off credit card debts is to secure a stable source of income.
Banks and credit card companies are likely to only approve applications of those who have a steady job. So, if you’re resigning from your company and you’re planning to get a credit card, we recommend that you delay the latter until you get a new job. No source of income plus a credit card is a recipe for a financial disaster.
The same applies to self-employed applicants. To get approved, you need to prove that your business or freelance work is active and profitable.
2. Be Honest With Your Application
This may be a basic tip. But the truth is that there are people who brazenly falsify some parts of their application. Others may even forge certificates of employment and payslips.
Never ever attempt to do this as banks are smart and sophisticated. They have various ways of determining a document’s authenticity. If your falsified documents and fake details are discovered, not only will your application be rejected―you may even be reported to the authorities.
3. Make Sure All Your Documents are Complete and Accurate
A lot of times, a credit card application is delayed (or worse, denied) because of the inconsistencies in the details of the applicant’s documents. As such, you must double-check everything, from your application forms to payslips and employment-related certificates. Carefully go through everything, including your employer’s contact number, your birthday, and your TIN.
4. Apply for a Credit Card That Matches Your Financial Standing
If you’re asking how to get approved for a credit card in the Philippines, one of the simplest answers is to apply for a card that matches your lifestyle and financial capability. If you attempt to apply for a card that doesn’t match your salary range, you’ll be rejected outright.
5. Apply for a Secured Credit Card
Got a time deposit or savings account? Your credit card application may stand a chance if you choose a secured credit card. For starters, a secured credit card requires collateral, normally a savings or time deposit account.
The credit limit is typically 80% to 95% of the amount deposited in your account. To keep your credit limit, the deposit in your account should stay there for at least a year. And eventually, you may ask the bank to convert your secured credit card into a regular one.
How to Use Your First Credit Card Responsibly
Now that you know how to get a credit card for the first time, the next thing that you need to do is to learn how to use it―that is if your application is successful! But let’s assume that you’ve already received your card. Here are a few important things to remember.
What to Do with Your New Credit Card
Before you can start using your first credit card, do these steps immediately:
- Sign at the back of your card. This is for your own security and convenience.
- Activate the credit card. Along with your new card, the bank has sent you instructions for credit card activation. Follow them. Usually, it involves calling the bank's hotline or sending an SMS.
- Enroll your credit card in your online banking account. This way, you can monitor your credit card transactions and view your monthly billing statements via your bank's electronic banking system. You can even schedule your credit card payments online to avoid missing a due date.
- Read the fine print. Make sure to read and understand the terms and conditions of the bank before you start 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) or in a secure drawer in your home (if you'll use it only for emergencies or travel) to keep it from getting lost or stolen.
Reminders on Managing Your First Credit Card
Now, you're ready to use your new card! Be a responsible credit card owner. Here are some reminders for first-time credit card users:
- Pay it off in full every month. This will keep you from paying finance charges and late payment fees.
- Don't spend beyond your means. Especially if you're given a six-digit credit limit, never make the mistake of maxing out your first credit card. It'll be harder to pay your monthly balances that way.
- Monitor your credit card transactions and statements regularly. If you notice anything suspicious, report it immediately to the bank.
- Never share your credit card details. Protect yourself from credit card fraud by making sure you don't give out your credit card and personal information to anyone.
Getting your first credit card is a simple process, but it gets more complicated when you start using it. As long as you're careful and frugal with your credit card spending, as well as consistent with your payments, you'll go along just fine. Follow our tips before you ask yourself how to apply for a credit card.
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