7 Things you Need to Know Before Getting your First Credit Card

Have you been wanting to get a credit card? Have you tried applying for one but got rejected? Here are some credit card facts that may help you decide or gauge if whether or not you are ready to own one. These are all based on experiences and not a professional advice. I am sharing them because I myself did not know these when I got my first credit card ten years ago. I would have maintained a very clean credit record if I did. At that time, I have just started working and I didn’t know anyone (who owns a card) whom I could ask for advice. So here we go.

1. Credit card is like a loan. A bank will lend you the money, and you will need to pay them back. Which means that ideally, you should not be using the card in buying stuff that you can not afford to buy in cash. Credit cards are helpful, and in fact could help you save money in many ways if you know how to use them smart.

2. Credit cards will not make you rich. Instead, it could lead you to spending way beyond your means and accumulate debt. On the other hand, a credit card can become a useful tool when you know how to use it wisely as mentioned above. Items that you can buy via installment plans at zero interest is a common example; you won’t need to shell out a huge amount at once but rather pay it in months. You can also take advantage of various promos, get discounts, earn points, and the like.

3. Never look at the required “minimum payment”. Instead, check your total amount due and pay that amount in full. The minimum payment is calculated at ONLY 1% to 3% of your total outstanding charges. Paying only the minimum is like adding up interests to your debt. Most people who ran away from their credit cards and got “black listed” have started from doing this practice. Again, always look at the TOTAL amount due and pay that full amount on time.

4. Late monthly payments are reported to credit bureaus. Which is why you need to know that owning a credit card requires you to be very disciplined and responsible. Going back to number one, if you cannot buy an item in cash, avoid buying it with a credit card.

5. What happens if you stop paying altogether? You can never run away from your credit card debt. Aside from not being able to qualify for another credit card, you may not get approved of any form of bank loans in the future. Your record will be sold to credit card debt collectors who will in turn harass you in forcing you to pay. These collectors are unprofessional, rude, and ruthless, you don’t want to deal with them.

6. If you are new to the work force, aim to save money first before getting a credit card. I recommend having at least Php50,000 in your bank account, or more than thrice your monthly salary. Why, you ask? Because the credit limit that banks will give you will be based on your income and is often more than twice your monthly salary. Just in case you get to max your card out (spending up to the maximum limit), you have at least a fund available to pay your balance. This way, you won’t be relying on your salary to pay your debt. This could make you live from paycheck to paycheck, and you don’t want that to happen to you.

7. It is not scary to own a credit card. It is only scary if you don’t know how to spend wisely. If you splurge on things you could hardly afford and if you have debts or loans, do not get a credit card. If you have no savings, do not get a credit card. However, if you know that you are responsible and you can control your spending, there is no reason for you to be scared. Again, if you are smart and wise, you can make your credit card work for your advantage.

Are you ready and responsible enough to own a credit card? You can try applying for one from Security Bank. Start by clicking on this referral link: https://www.securitybank.com/m?10124001601.

I wish you the best of luck! Let us know if you get approved. Most importantly, remember these advices when you start using your card.

Get Help From The Credit Card Association of the Philippines – CCAP

Photo Credit: CCAP

Still wondering how to settle your credit card debt with your bank or banks? If you have more than one credit card and you want to consolidate your payments, you may need the help of the Credit Card Association of the Philippines (CCAP). Watch the video below for more information:

IDRPAre you financially distressed and buried in credit card debt due to the factors beyond your control? We’re here to help! The Credit Card Association of the Philippines, Bangko Sentral ng Pilipinas, and participating banks launched the Interbank Debt Relief Program. Watch this video to learn more about the program.

Posted by Credit Card Association of the Philippines – CCAP on Tuesday, 7 June 2016

Basically, this Debt Relief Program allows credit card users to sustain paying the account and prevent further delinquency. “To enroll in the program, CCAP will review the debtor’s financial capacity. The repayment period is up to 10 years for “severe cases indebtedness” with a low rate of 1.5 percent per month or lower depending on the profile of the customer, debt to income ratio and completion of documents required for the program.  The participating banks may also have the option to disapprove application for customers who misused and abused the credit facility granted by the banks, said CCAP.

Based on a statement, CCAP said that as part of the guidelines of the program, all existing credit cards of the customer will have to be blocked or cancelled upon enrolment of the accounts to the program.

Rebates and rewards earned will also be forfeited. “Additionally, customers cannot apply for new credit facility with the participating banks while the accounts under the IDRP are not yet fully settled.” – Source: http://www.ccap.net.ph/?p=632

CCAP presently includes as members Asia United Bank, Bank of Commerce, Bank of the Philippine Islands, Citibank, China Banking Corp., Eastwest Banking Corp., Equicom Savings Bank, HSBC, Maybank, Metrobank Card Corp., Philippine National Bank, RCBC Bankard, SB Cards Corp., Standard Chartered Bank, and Union Bank of the Philippines.

What is the first step? Call your bank and ask them about IDRP!

To learn more, you may visit the CCAP at their Facebook page and website:
Facebook Page: https://web.facebook.com/CreditCardAssocPH/
Website: http://www.ccap.net.ph

How Credit Card Debt Collectors Find Your New Contact Information

I use to frequent online forums for topics concerning unpaid credit credit card debts. I was having the same dilemma back then, and because this is not commonly being discussed face to face, I understand why a lot of us resort to online message boards to talk about it. What I observed from reading everyone else’s stories is that, a lot of people are surprised at how these debt collectors found them when they already changed their numbers, and have moved to different locations. The answers are simple, and they’re mostly in the internet.

1. Social Media. It is very easy to find someone on social media. Just type in a old friend or acquaintance’s name on Facebook’s search bar and there’s a high chance that you will find them. You can even use phone numbers to look them up. If they used that number to create their account, their profile will appear on the search results. It may not be as easy to do this on Twitter or Instagram where most users prefer a handle or nickname.
2. Google. Try googling your name, and your social media profiles, old and new, active or not, are likely to be shown. If you passed a board or licensure exam, you will see your name on various lists published by the PRC, some blogs, and other major publications. Try searching for your old numbers and anything that was posted online that has your number on it can also be found.

3. So you changed jobs, or even moved overseas. But debt collectors were able to track you and even calling you via IDD. They may have seen your new job title or location which you posted in your Facebook or LinkedIn profiles. You may choose to turn your Facebook’s privacy settings to maximum, but doing so with LinkedIn defeats the purpose (of having a LinkedIn profile).

4. Bank Records. If you recently applied for a salary loan, personal loan, car loan, or home loan, and was lucky enough to get approved, you must be aware that your credit record is accessible to all banks. As this is a new transaction, it surely has your new contact details. Your credit card issuer may have passed these information to the credit card debt collectors.

It is difficult to keep your privacy in this digital age. You’ll be surprised to discover that your personal information is everywhere. While most of these can be hidden (at least from debt collectors), your credit record and contact details that go with it are being shared by all banks. Therefore, I will keep recommending that you settle your debt with your bank like what I did. CLICK HERE to find out how I got cleared from HSBC. Trust me, it is liberating!

Getting a Secured Credit Card from Security Bank

Four months after settling my six-year-old credit card balance with HSBC, I applied for a credit card at Security Bank via a friend’s referral. I went ahead for two reasons:

  1. To check if getting a clearance from HSBC could clear my bad credit card history.
  2. Just to try my luck.

I was not approved and I am not surprised. I understand that it has only been four months since I got the clearance from HSBC so the chance of getting cleared from the “system” at that point is very slim. I proceeded with my next option which is to get a secured credit card.

I have been hearing about this option before and BPI seems to be the most popular provider. However, I never saw any information about this on their website so I was hesitant to apply. I do have a prepaid card with them which was very useful for online transactions. I used it for about 6 years.

In February this year, I submitted my application for a secured credit card to Security Bank. They call this product “Fast Track Program”.

In summary, you will need to open a savings account with a minimum deposit amount of Php15,000. Your credit limit will be 80% of the total holdout amount. So if your holdout amount is Php15,000, your credit limit will be Php12,000.
You can deposit more money to your account, but you cannot use or withdraw the holdout amount for at least one year. Should you need to withdraw the holdout amount, your credit card will be cancelled and any outstanding balance will of course be deducted. This is basically a test of how “qualified” you are to get a regular credit card. If you cannot manage your finances with a secured credit card, you probably couldn’t do so with a regular credit card. To make it even more secure, I voluntarily opt to not receive an ATM card for my savings account.

It feels like a second chance in owning a credit card. I use it for the basics – groceries, Uber/Grab, and lately, on a three-month installment plan. I follow the most important rule: if I can’t buy or pay it in cash, I won’t use the card. And above all, I make sure that I pay the total balance on time.To apply for a secured credit card from Security Bank, go to https://www.securitybank.com/.

The approval is 100% provided that you meet all their requirements. The processing time is supposedly 10 business days, but I got my card in the mail after three weeks.