What You Need To Know about Credit Card Charges

credit cardsThe convenience that these plastic cards give us is the primary driver behind the boom of credit card usage. A simple credit card could be easily used to pay for that gorgeous suit and taking out your date for a fancy expensive dinner. Although the privilege of using a credit card is that when you flip it up on a counter,  it registers nothing emotionally rather than having a “feel” of your money leaving you, it does come with a price that people take for granted. An accumulation of the “negligible” charged fees imposed by the merchants could build into bigger amounts in the future. Credit card as a valuable and necessary financial tool does not only help you to establish a credit history it can also help you make convenient purchases and take advantage of the benefits and services offered by credit issuers.

A credit card is a quick road to debt that many people spend years of paying off if used unwisely. One of the central steps in managing our finances is to be aware of the charges imposed. Do not be easily lured into free interest-period term. Before agreeing to terms and conditions, it is advisable to understand the whole detail to avoid paying more than what we intend to. Before whipping out that piece of plastic, make sure you know what you’re getting into. A few lists of charges to be in the lookout for includes:

Credit Card Charges

Joining Fee:  A one-time application fee, usually ranging between PHP200-500. The application fee is sometimes charged along with the annual fee

Annual Fees: These are fees charged by banks on a yearly basis. Different card types (gold, classic, platinum and so forth) impose different annual fees. Some supplementary cards are also

Finance Charges:  The interest charged on the unpaid outstanding portion of credit card bills, usually between 2.5% – 3.5% per month.

Late Payment Charges:   A charge for making less than the minimum payment or payment after the due date or both. A portion of the total outstanding balance of the card, usually a sum of between 1-7.5% (depending on the bank) or a maximum of PHP500, whichever is higher.

Cash Advance Fee:  A fee charged for making a cash advance. Credit cards could work in the same way as a debit card, in that you can withdraw money from it. However, bear in mind that the interest charged on this could be as high as 3% to 5% on the amount withdrawn.

Foreign Exchange Charges: Credit card payments made overseas attract foreign exchange charges of between 0.7-3.5% depending on banks

Other hidden charges

Statement Retrieval Fee:  This fee generally runs anywhere. Some banks charge a fee for hardcopy statements, with the rate ranging from PHP 50 to PHP 300 annually.  Additional statement requests may also attract additional charges.

Card replacement fee:  A replacement card could cost you anywhere between PHP 250 and PHP 500.

Grace period: The grace period is the maximum time between a charge received by statement closing date and when you are obliged to pay it in full to avoid interest. Statement closing date is usually about 20 days from the statement date assuming that the previous month’s balance was paid in full.

We have collected information on more than 100 credit cards in the Philippines. You can view the details and compare credit cards available on our site, to find which one matches your lifestyle.

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