For most people, credit cards are just that, a card. Unknown to them, there are many types of credit cards that have specific benefits and uses. There’s a reason why there are credit cards that are best used for certain spending behaviors.
Here are the many different types of credit cards in the Philippines.
Balance Transfer Credit Cards
These credit cards usually offer the option to transfer your balance from your other existing cards—all with 0% interest. This allows cardholders to switch around their high-interest debt from other cards, to a new ones that have zero or a very low matching interest rate.
Cards specializing in balance transfer helps eliminate card debt faster. Bear in mind that some of these cards still have a balance transfer fee. When used correctly, these cards can offer additional savings—particularly to those who plan on actively paying back their debts.
Low Interest Credit Cards
In the world today, you’ll seldom find cards that have low interest rates. They are rare and usually used to attract people, despite the otherwise mediocre terms they have. Often these credit cards have relatively high fees, and no reward programs.
Other times, these are just used to attract consumers who are on the fence to getting credit cards. The cards would then go back to its regular interest rate after a year or so.
When considering this type of credit card, read the terms and conditions thoroughly so you know exactly what you’re getting and/or understand when the regular rates will begin.
Cashback Credit Cards
These cards focus more on offering cashback services. Cashback basically provides cardholders with a percentage of their purchases refunded to them (usually 1 to 5% of the price).
This small percentage can pile up into big amounts when you use your credit card a lot.
For example, if you spent a total of PHP1,000,000 a for the year, you would have collected PHP10,000 if your cashback percentage was just 1%.
Most cashback credit cards can be used for many purchases, such as mall items, restaurant bills, and even utilities such as gas, and electricity bills.
General Reward Points Credit Card
Most credit cards that use reward points also have cashback options. However, they focus more on providing rewards such as items and services to their cardholders.
Reward programs are similar to a credit card’s own personal online shop. These would offer exclusive items—usually from the many partners of the credit card company. In most cases, reward catalogs would feature appliances, gadgets, gift certificates, discounts to restaurants, and even hotel stays.
Cardholders that collect enough points can easily get a free night’s stay at a five start hotel, or even get the latest iPhone for free as long as it’s part of the rewards catalogue.
Airline Miles Cards
Many airlines have their own frequent flyer programs. A kind of exclusive club for people who love to travel and are loyal patrons of these airlines. Often, these airlines partner up with credit card companies to make credit cards that are specifically designed to earn them points, or airline miles as it’s called in the industry, that can be used for specific frequent flyer programs.
The best example of such a card here in the Philippines is the PNB-PAL Mabuhay Miles World Mastercard. This credit card was created with the partnership of PNB and PAL in mind. It’s rewards system focuses a lot on the accrual of Mabuhay Miles, the points used in the Mabuhay Miles Program.
The credit card also provides exclusive access to the Mabuhay Lounge and Priority Pass for PAL Check-ins and boarding, among other benefits.
There are also non-specific Airline Mile credit cards. These focus on the accumulation of points that can easily be converted into airline miles for different frequent flyer programs.
These cards would usually have less bonuses and rewards when compared to airline specific credit cards. However, the flexibility and variety in the airlines it can be used at helps make it very relevant.
Citibank provides arguably the best credit cards in the Philippines for travel that lets its points be used by multiple airlines. The card boasts compatibility with over 60 airlines—giving you a lot of options to choose from.
There are so many other credit cards that you can choose from that are great for travelling, check out our blog about the best travel credit cards in the Philippines here!
Secured Credit Cards
This is one of the cards that are used when a person has bad credit. it’s usually meant for people who have below average credit scores.
Basically, secured credit cards require an initial cash deposit that is used as collateral in order for it to be used. Bear in mind that the collateral can be more than just money such as personal items, properties, etc.
The collateral is only used as a safety net. If the cardholder doesn’t have any problems with paying in full, they can easily upgrade to a better plan and retrieve their deposit—after their credit score improves to a reasonable level.
These type of credit card is usually used to improve the credit score of someone who is just starting, or someone who already has low credit scores to begin with.
Business Credit Cards
These credit cards are very similar to rewards and airline mile credit cards. These ones, however, are designed for other, more specific uses. There are credit cards that specialize in business transactions. These would have bonuses that are geared towards business transactions. These would usually include business-specific rewards and bonuses. Most business credit cards have higher credit limits as they consider the standing of the business, not necessarily the individual using it. They also feature expense management reports and an option to add additional supplementary cards for a number of employees.
Keep in mind that business credit cards should strictly be for professional expenses only. These are often used by smaller companies to help build up their credit for future credit borrowing in the future.
With the additional services provided by these cards, small and medium sized businesses benefit a lot especially for bookkeeping and to create a fine line between personal and professional expenses.
Student Credit Cards
Student credit cards are a popular choice for college students abroad. These are essentially starter credit cards for students who are not yet qualified to get their own standard credit card.
In most cases, these credit cards are used to fund students that live far away from their family and, more importantly, help start building credits at an early age.
Student credit cards found abroad usually offer a load of services that help teach students the importance of credit and how to be responsible with it. Some even include financial literacy education and a few resources that are available online. They also have a more active approach when it comes to making sure that the cardholder pays on time as a means to develop good payment habits.
Unfortunately, there are no student credit cards available here in the Philippines. In most cases, college students just get supplementary or secured credit cards. They’re a far cry from what student credit cards provide but are decent enough for most people in the Philippines.
It’s important that you have the appropriate credit card for your needs. This will make it so that you will have the most efficient tool to pay for your expenses.Whenever you’re applying or just choosing a credit card, bear in mind your needs and wants. Is this your first credit card? get a secured one, do you want to get rewards for your expenses? get rewards cards, airline miles, or cashback credit cards.
Identify your needs and wants and align them with the credit card that you plan on getting!