CREDIT CARD FOR BEGINNERS | CREDIT CARD 101 PHILIPPINES | What you need to know

Summary

Charm from Reddit Adult Philippines discusses the ins and outs of credit cards in a comprehensive video. She covers the basics, types, and associated fees, highlighting the pros like convenience and rewards, and cons including overspending and high interest rates. Charm also provides guidance on obtaining a credit card, emphasizing the importance of understanding terms and fees, and securing one's card to prevent fraud.

Takeaways

• 💳 A credit card is a tool that provides a line of credit from a bank, allowing you to spend money and pay it back at the end of the month.
• 🔄 The billing cycle and payment due dates are essential to understand how credit cards operate on a 'buy now, pay later' basis.
• 🏦 Different types of cards include prepaid, debit, and credit cards, each with varying levels of access to funds and spending flexibility.
• 🔑 Credit card brands like Visa, Mastercard, and American Express offer different promos and partnerships with merchants.
• 🛍️ Pros of using a credit card include convenience, flexibility in budgeting, security, rewards, and building credit history.
• ⚠️ Cons include the risk of overspending, high interest rates, penalty fees, and the potential for fraud.
• 📝 Applying for a credit card involves meeting age requirements, providing proof of income, and having a good credit history.
• 💼 Credit card tiers range from basic cards with no annual fees to premium cards with high annual fees and exclusive benefits.
• 💵 Fees and charges include annual fees, late payment fees, interest fees, over-limit fees, cash advance fees, balance transfer fees, and international transaction fees.
• 🔒 Upon receiving a credit card, sign the back, activate it, link it to a bank app, read the terms and conditions, store it securely, and never share sensitive information.
• 📚 The video aims to educate viewers on the comprehensive aspects of credit cards to make informed decisions about personal finance.

Q & A

What is the primary purpose of a credit card according to the video?

A credit card is a financial tool that allows you to spend money via credit, essentially borrowing from the bank with a line of credit that you have to pay back at the end of the month.

How does the billing cycle of a credit card work?

The billing cycle, for example, could be from July 8th to August 7th. All expenses incurred during this period are typically due at the end of the month, which might be August 30th or 31st.

What is the difference between a prepaid card, a debit card, and a credit card?

A prepaid card must be loaded with money before use and isn't linked to a savings account. A debit card is linked to a savings account, allowing you to spend the money in the account. A credit card provides a line of credit from the bank, which you don't have to load or have in savings to use.

What are some of the credit card brands mentioned in the video?

The video mentions Visa, Mastercard, Unionpay, JCB, Diners Club, and American Express (Amex) as some of the credit card brands.

What are some of the advantages of using a credit card?

Advantages include convenience, flexibility in budgeting, security, the ability to dispute unauthorized charges, earning rewards, and building credit history.

What are some of the potential downsides of having a credit card?

Downsides include the risk of overspending, high interest rates if the balance is not paid in full, high penalty fees for exceeding limits or late payments, and the risk of fraud.

How can one apply for a credit card?

One can apply for a credit card by walk-ins at a bank, applying online, or through credit card pop-ups in malls or grocery stores.

What are some requirements for applying for a credit card?

Requirements generally include being at least 21 years old, filling out an application form, providing valid IDs, and proof of income. For employed individuals, this could be a certificate of employment, pay slip, or ITR. For business owners, it could be an ITR or financial statements.

What are the three tiers of credit cards mentioned in the video?

Tier one includes basic credit cards with no annual fees or rewards but smaller credit limits. Tier two comprises mid-tier cards that offer rewards and cashbacks but have annual fees. Tier three consists of premium credit cards that offer higher payouts, exclusive benefits, and the highest annual fees.

What are some of the fees and charges associated with credit cards?

Fees and charges include annual fees, late payment fees, interest fees or finance charges for unpaid balances, over-limit fees, cash advance fees, balance transfer fees, and international transaction fees.

What are some of the important steps to take after receiving a new credit card?

Steps include signing the back of the card, activating it, linking it to a bank app, reading the terms and conditions, storing it securely, and never sharing sensitive card information.

Outlines

00:00

💳 Introduction to Credit Cards and Personal Finance

The video script begins with an introduction to credit cards and personal finance by Charm from Reddit Adult Philippines. It discusses the fear and misuse of credit cards, emphasizing their potential to aid or harm personal finances. The video promises to cover the basics of credit cards, their pros and cons, the application process, types of credit cards, associated fees, and tips for new cardholders. The script also outlines the differences between prepaid, debit, and credit cards, and introduces various credit card brands available in the Philippines.

05:01

🔑 Pros and Cons of Using Credit Cards

This section of the script delves into the advantages and disadvantages of using credit cards. Pros include convenience, flexibility in budgeting, security, rewards, and building credit history. Cons, however, cover the risk of overspending, high interest rates, steep penalty fees, and the potential for fraud. The script stresses the importance of discipline in credit card usage and the need to fully understand the terms and conditions associated with credit cards.

10:02

📋 How to Obtain a Credit Card and Application Requirements

The script provides an overview of the methods to obtain a credit card, such as walk-ins, online applications, and mall pop-ups. It lists the requirements for applying, including age, valid IDs, proof of income, and the importance of having a good credit history. The section also discusses the benefits of having an existing relationship with a bank and the impact of negative credit history on the approval process.

15:03

🏦 Types of Credit Cards and Associated Fees

This paragraph categorizes credit cards into three tiers based on their features and fees. Tier one includes basic cards with no rewards but also no annual fees. Tier two offers mid-tier cards with rewards and cashback features but with annual fees. Tier three represents premium cards with high rewards, exclusive benefits, and the highest annual fees. The script also explains various fees such as annual, late payment, interest, over-limit, cash advance, balance transfer, and international transaction fees.

🛡️ Safeguarding and Managing Your Credit Card

The final paragraph focuses on the steps to take upon receiving a credit card, such as signing the back, activating it, linking it to a bank app, reading the terms and conditions, storing it safely, and never sharing sensitive card information. The script concludes by emphasizing the importance of personal finance knowledge and invites viewers to engage with the content by commenting and subscribing.

Keywords

💡Credit Card

A credit card is a payment card issued by a financial institution that allows cardholders to borrow funds, make purchases, and pay for them later. In the video, the speaker explains that a credit card is a tool that can be used for budgeting and managing finances, but it can also lead to overspending if not used responsibly. The video discusses the process of obtaining a credit card, the types available, and the associated fees and charges.

💡Billing Cycle

A billing cycle is the period during which a credit card issuer calculates the amount owed by the cardholder. It typically starts when the previous statement was issued and ends when the current statement is generated. The video uses the example of a billing cycle from July 8th to August 7th, highlighting how all spending within this period is due at the end of August, illustrating the 'buy now, pay later' concept.

💡Prepaid Card

A prepaid card is a type of payment card that is loaded with a predetermined amount of money before use. Unlike credit cards, prepaid cards do not involve borrowing. The video mentions prepaid cards like PayMaya or GCash as beginner options that can be used for online purchases or ATM withdrawals, but they require initial loading of funds.

💡Debit Card

A debit card is a payment card that allows its holder to transfer money from their bank account to pay for goods and services. The video explains that a debit card is linked directly to a savings account, and the funds available for spending are limited to the account balance, unlike credit cards which offer a line of credit.

💡Card Brands

Card brands refer to the logos or networks associated with credit cards, such as Visa, Mastercard, UnionPay, JCB, Diners Club, and American Express. The video points out that these brands often partner with different merchants to offer various promotions and that they can influence the types of rewards and benefits a cardholder might receive.

💡Rewards and Cashbacks

Rewards and cashbacks are incentives offered by credit card issuers to encourage spending. They can come in the form of points, rebates, or miles that can be redeemed for goods, services, or travel. The video emphasizes that many credit cards provide rewards for essential purchases, making them a way to get something back for regular spending.

💡Credit History

Credit history refers to a record of an individual's borrowing and repayment behavior over time. In the video, the speaker mentions that having a good credit history can make it easier to get approved for loans or other credit products. It's a way for financial institutions to assess the risk associated with lending money to potential borrowers.

💡Annual Fees

Annual fees are charges that credit cardholders are required to pay each year to maintain their credit card account. The video explains that these fees can vary depending on the type of credit card, with premium cards often having higher annual fees due to the additional benefits they offer. However, some cards may have zero annual fees, especially for the first year or for life.

💡Interest Rates

Interest rates on credit cards refer to the cost of borrowing money expressed as an annual percentage rate (APR). If a cardholder does not pay off their balance in full each month, they are charged interest on the remaining balance. The video warns about the high interest rates on credit cards, averaging around 36% per year, and advises paying off the balance in full each month to avoid these charges.

💡Fraud

Fraud in the context of credit cards involves unauthorized use of a cardholder's information to make purchases or withdraw funds. The video discusses the risk of credit card fraud, such as phishing scams, where scammers may attempt to obtain sensitive card information. It emphasizes the importance of never sharing card details like the CVV number or one-time PINs with anyone.

Highlights

A credit card allows you to spend money via credit, with a line of credit from the bank that you must pay back at the end of the month.

Credit cards can be a great tool for budgeting as they consolidate all your spendings into one monthly bill.

Prepaid cards are beginner cards that require you to load money before use, unlike debit cards which are linked to your savings account.

Credit card brands like Visa and Mastercard offer different promos and are known for lower annual fees compared to other brands.

Credit cards offer convenience, flexibility, security, rewards, and help in building credit history.

The risk of overspending is a significant con of credit cards, especially due to the intangible nature of card transactions compared to cash.

High interest rates and penalty fees are associated with not paying off your credit card balance in full each month.

Credit card fraud is a risk, and it's important never to share sensitive card details like the CVC number or one-time PINs.

To get a credit card, you can apply in person at a bank, online, or through pop-ups in malls and groceries.

Requirements for a credit card application include being at least 21 years old, having valid IDs, and proof of income.

Having an existing relationship with a bank or a good credit history can increase your chances of approval for a credit card.

Credit cards are categorized into three tiers: basic with no annual fees, mid-tier with rewards and annual fees, and premium with high annual fees and exclusive benefits.

Annual fees, late payment fees, interest fees, and over limit fees are common charges associated with credit cards.

Cash advance fees, balance transfer fees, and international transaction fees are additional charges that may apply to credit card use.

Upon receiving a credit card, it's important to sign the back, activate it, link it to the bank's app, and read the terms and conditions.

Storing your credit card securely and never sharing sensitive information are crucial steps in credit card management.

Transcripts

so let's talk about credit cards

hi if it's your first time here i'm

charm from reddit adult philippines a

channel about personal finance

entrepreneurship and adulting how to's

here are our featured comments for the

week and if you want to get featured

then comment down below

and here are our instagram shout outs if

you want to get featured then

insta story this video and tag me at

reddit adult ph

okay so credit cards people are either

afraid of them

or want them for the wrong reasons and

that's understandable because a credit

card is a tool

that can either help you with your

finances or do

harm to them so this is gonna be a long

video so let me break down to you what

we're gonna be talking about today

first we're gonna be talking about what

a credit card is and what are the things

associated with that

and the next is we're gonna jump into

the pros and cons of having a credit

card

after that we're gonna be talking about

how you can get a credit card

the next is we're gonna be talking about

the types of credit cards

the charges and fees that credit cards

may have

and the last is we're gonna talk about

the things that you need to do when you

get your credit card

okay so let's start the video

first is what is a credit card so a

credit card is

a piece of plastic that allows you to

spend money via credit

or utang so you have a line of credit

with the bank

which you then have to pay for at the

end of the month

and how that works is that you have a

billing cycle

and then you have a payment due date

okay so for example your billing cycle

is from july 8th to august 7th

so that's one month so everything that

you spend for that month will usually be

due at the end of

august so it can be either august 30 or

31

so that's your payment due date so

that's why it works as a buy now

pay later so this can really be a great

tool to use for

budgeting because all your spendings are

consolidated

but it can also be really detrimental if

you can't control your spending

okay so now let's talk about other

similar cards

we have the prepaid card we have the

debit card and the credit card

so what's the difference between these

cards so a prepaid card like the

paymaya card or the video cash card so

these cards are more of beginner cards

so they're not attached to a savings

account

but you can still use them in stores

online purchases or atms

but you have to load at first okay so

next

is the debit card a debit card is linked

to your savings account

so that what's in your savings account

can be spent for the debit card

so the debit card is like an upgraded

version of a prepaid card but it relies

on your savings account

and the last is a credit card which i

mentioned earlier you have a line of

credit

in the bank so meaning you don't even

have to have a savings account or you

don't have to load the card before you

can use it

so it's like you're borrowing money from

the bank i hope we're clear with the

differences with those cards

now let's talk about card brands so you

may have heard about brands like

visa mastercard unionpay jcb diners club

amex or american express so what are

these

so they're basically just credit card

brands or networks

and the main difference i would say for

them especially here in the philippines

is that they just

offer different promos they partner with

different merchants so they offer

different promos

okay so generally if it's your first

credit card you can get a visa or a

mastercard because it's the most common

ones

and they're usually known to be a little

bit cheaper in terms of annual fees

compared to the other ones

okay so we'll be talking about fees and

charges later on

let's move on to the pros and cons of

having a credit card

okay so first let's talk about the pros

of course the very first pro

is that it's very convenient you don't

have to bring around a lot of cash

especially if you're buying a big ticket

item like a ref or a television

you don't have to log around a lot of

cash because you can use your credit

card

another convenient thing about credit

cards is you can take advantage of zero

percent installments

okay next is that it's flexible like i

said earlier you can pay for all the

things that you spend this month

next month so you can be a little bit

more flexible in terms of your budgeting

the third is a secure so again if you're

buying something big you don't have to

bring a lot of cash you can just bring

your credit card

and if you lose your credit card you can

just call the bank and have them lock

your credit card

or you can lock it from your app and

also it's pretty easy to dispute

charges or purchases that are not yours

again you just call up the customer

service hotline and they really

prioritize

those kinds of cases and the next is

that you can get rewards

so i mentioned in my previous video some

of the credit cards i

use especially for shopping or for

traveling so you can check that out

but basically a lot of credit cards

offer rewards

rebates or miles i'll be discussing more

about that later

but it's a good way to get something

back every time you have essential

purchases

like groceries or other utility bills so

next

is building credit history okay so we

don't really have a credit score here in

the philippines

but we have this thing called credit

history it's easier to get approved if

you already have

a credit history with a bank and then

they can see that you

pay on time and in full every month then

it's easier for them to approve your

loan

okay so again it's building relationship

with financial institutions

now let's talk about the cons okay so

the first con

is the risk of overspending i said it in

my worst mistakes video

overspending is really a tendency

especially because of lifestyle

inflation

and when it's just a credit card you

don't really feel that you're spending

the money as compared to giving actual

cash

so if you notice spending ten thousand

pesos in cash

and swiping ten thousand pesos in your

credit card feels

very different and that can be a risk if

you can't discipline yourself when you

spend with your credit card

okay so next is high interest rates so

you can only encounter this when you

don't pay your credit card in full

so credit card interest rates are so

high

on average is around three percent per

month

so that's 36 in a year so that's really

high

again i really discourage you to leave

any balance in your credit card

and you always have to pay them in full

okay so the next con is something

similar

they have really high penalty fees so if

you

exceed your limit or you pay late for

your credit card

the fees are really high okay so we're

gonna be talking more about that later

but that is definitely a con

and the last is there is also a risk of

fraud

so credit cards are typically secure

like i mentioned earlier but there is

still a risk of fraud so credit card

fraud like credit card phishing is very

common for example when

fake credit card agents call you up ask

for your credit card number

for your expiry date your cvc

and then they're gonna say to you that

okay we'll be sending a text please tell

me the

one-time pin and then you'll give it so

never do that

they never ask for your cbc number the

three-digit number at the back of your

card

and also your one-time pin so never give

those to anybody

so those things do happen so that's

another disadvantage of having a credit

card

okay so now that we've talked about the

pros and cons and you want to get

yourself a credit card

how would you go about that okay so

let's talk about how you can get a

credit card there are so many ways to

get a credit card

first is doing walk-ins so you just walk

into a bank and apply for a credit card

next is you can apply for credit cards

online so i talked about some credit

cards that you can get online

in this video and you can get cash back

when you use shopback so i'll leave my

shop back link down below

so again credit card application online

and third is applying through credit

card pop-ups and malls or groceries

and usually when you do this they give

you freebies like a cup or an umbrella

so yeah let's talk about some of the

requirements that are needed when you

apply for a credit card

first is you need to be 21 years old and

above

next is you need to fill up an

application form you need

valid ids you need proof of income for

the proof of income if you're employed

you need to be at least

one year in employment and they will be

asking for either

certificate of employment your pay slip

or your itr

so if you're a business owner they need

at least two years of you being in a

profitable business

so again they will be asking for either

an itr

or financial statements so usually you

need a gross income

of around 120 000 to 1 million pesos

in one year okay so this depends on what

credit card you are applying for

so some of the ways that you can get

easily approved for a credit card is

that if you have

a primary credit card already with

another bank

or if you already have an existing

account or relationship with a certain

bank

okay so it's easier for you to apply in

those banks also if you already have

existing credit history like maybe you

already have approved loans and they can

see that you're paying your loans on

time okay so i mentioned earlier that we

don't have a credit score

but it will be harder for you to get

approved for your credit card if you

have negative files on their nfis

or the negative file information system

so the nfis is a

shared database of all the financial

institutions

and they basically record bad credit

okay so if you want delinquent on a loan

or you already have a past credit card

that you have not paid for

then that will be in the nfis and that

might be a hindrance for you

if you apply for another credit card

okay now let's talk about the types of

credit cards

and this is kind of grouped into three

tiers okay so for tier one

that's usually the basic credit cards

that's credit cards that don't really

have

annual fees or other kinds of fees and

penalties

but they also don't have rewards and

they usually have a smaller credit limit

so next is the tier two so for the tier

2 there are

several types of credit cards under this

tier they can either be reward cards

rebate or cashback cards or miles cards

so basically these credit cards are kind

of the mid-tier credit cards

they offer a lot of rewards and

cashbacks

and miles for travel and they also offer

a lot of promos as well

but with those benefits they also

usually have annual fees of around 2500

to five thousand pesos

okay so let's move on to the third tier

of credit cards and these are kind of

the premium credit cards

so for these credit cards you usually

get higher payouts for points

you usually get unlimited access for

lounge

you get a concierge you get invited to

more exclusive

events and sales and they also have

bigger discounts for their partner

merchants

okay so those are the premium credit

cards

the annual fees for these credit cards

range from

8 to 12 000 pesos here in the

philippines

so yeah those are the more common types

of credit cards here in the philippines

now let's talk about the fees and

charges so first are the annual fees

i've already mentioned this

usually when there are more benefits to

a car there's also a higher annual fee

okay but again you can also get credit

cards with zero annual fee for life so

you can also get that if it's your first

credit card

so next are late payment fees so for

example

your credit card due date is on the 30th

and you're paying

on the 29th with a check that usually

clears around the 31st

so make sure you give allowance and make

sure that your payment really goes

through before the due date

so you don't get slapped with the late

payment fee

so for the late payment fees it's

usually around 750 pesos

again it differs for every card or every

bank so

that's just the average so the next one

are interest fees or finance charges

okay so these are basically fees that

you incur

if you don't pay your credit card full

every month

so the remaining balance gets slapped

with a three to three point five percent

interest

every month okay so that's really high

so again i really discourage you guys

keeping a balance on your credit cards

pay them in full every month okay so the

fourth one

are over limit fees over limit fees are

basically charges that you get

when you go over your credit limit so

for example your credit limit is twenty

thousand

and you go over it like you spend twenty

two thousand

your credit card will immediately be cut

off for a while

and there is also a fee associated to

that okay so

just make sure that you are not spending

more than your credit limit so for

over limit fees it's usually around 500

pesos per month next are cash advance

fees okay so some credit cards offer

cash advances

so you can either do it over the counter

or through a machine

so for the cash advance fee it's usually

around three to five percent of the

money that you are

advancing okay so next are balance

transfer fees and this is when you move

your balance from another credit card to

another credit card

sometimes they offer zero percent

balance fee because they want you to pay

interest from this bank to their bank

but also sometimes there are fees

associated with it

and again it's around three to five

percent okay so last

are international charges or

cross-border fees

so these are charges that you get when

you have foreign transactions so when

you're abroad

some credit cards offer really low ones

especially travel cards

but on average they are at around one to

three point five percent

okay so we are down to our last topic

and these are things that you need to do

once you get your credit card so when

you get your credit card in the mail

first thing you have to do is to sign at

the back of the credit card

okay so the next is you have to activate

your card

most credit cards can be activated

online but if you prefer to call them

you can also do that

so they send to you an unactivated card

just in case it falls to the wrong

person they can't use your credit card

okay so next is to link your card to

their app so i highly suggest for you to

link your credit card to their app

so that you can regularly check for

fraudulent activities and such

okay so next is to read the terms and

conditions and especially the charges

and fees that come with your credit card

so your credit card will be sent in an

envelope like this and they will

include a credit card agreement and then

the fees and charges

so be aware of these and really go over

them

okay okay so next is to store your

credit card in a safe place okay so if

you bring them every day you put them in

your wallet or in your bag

and then if you use it only for

emergencies then you can put it in a

secure drawer maybe at home

okay so the reason for this is it's

really not advised to let

any other person use your credit card

that's why in most of the transactions

here in the philippines they let us sign

in the credit card receipts so lastly

and i mentioned this earlier

never give out your credit card number

your credit card expiry date and the cvc

number at the back of your card

to anyone especially not anyone over the

phone

or through email so yeah that's it i

know that this is gonna be a long video

i have been sitting

here for a while but i really hope that

i covered everything that you need to

know

before you get your credit card so i was

thinking to make this video two separate

parts

but i really don't want you guys to miss

anything so if you have any questions

then comment

down below i'm gonna reply to each and

every one of you

and if you like this video then please

hit the like button

and subscribe to this video it really

helps out this channel a lot

and again i know that adulting is

already hard but personal finance

doesn't have to be

that's why i make these kinds of videos

for you guys and this has been charm

from meredith adult philippines and i

will see you on my next video

you