5 Things You Need To Understand Before You Submit Your Credit Card Application

When used responsibly, credit cards can serve as valuable financial tools for managing expenses, acquiring flexibility for payments, and even collecting rewards or perks for regular use. They can also help a cardholder build a positive credit history, which makes it easier to access loans and other financial products in the future. And thanks to the streamlined credit card online application Philippines’ banks offer for credit card programs like that of the Landers Cashback Everywhere Credit Card application by Maya, it’s easier than ever for Filipinos to access them.

However, it’s essential to fully understand the factors that influence your experience with credit cards, as credit card use can also come with risks. For instance, mismanagement or a lack of awareness about fees, interest rates, and payment deadlines can put you on the path of debt and financial difficulty if you’re not careful. That being said, individuals who plan to apply for credit cards need to approach the issue with both knowledge and care.

This article will guide you through the most important things you need to know to make the wisest decisions when it comes to your credit card application. Keep these in mind when you go through the motions of applying for a credit card like the Landers Cashback Everywhere Credit Card:

1 Determine the Right Type of Credit Card for Your Needs

When applying for a credit card, be sure to select the right one for your lifestyle and financial goals. In the Philippines, there’s a wide range of credit cards available, including rewards cards. These can be quite ideal for individuals who spend a significant amount on everyday purchases such as groceries, dining, and travel. That’s because these cards allow you to earn rewards points or cashback, which can be redeemed for products, airline miles, or other perks. If you’re someone who loves to travel or frequently shops, a credit card will be a great way to get the most value out of your spending.

Are you unsure about which type is right for you? It may be good to compare cards based on their features, fees, and the rewards they offer to ensure you’re selecting one that actually aligns with your financial goals.

2 Check the Interest Rates and Fees

It’s also important for you to understand the interest rates and fees associated with each card. In the Philippines, credit card interest rates are typically expressed as an annual percentage rate (APR), and this rate can vary significantly from one card to another.

While some cards may offer low APRs, others may charge higher rates, especially for cash advances or unpaid balances. If you plan to carry a balance on your card, be sure to choose a card with a favourable interest rate to avoid incurring excessive costs over time.

In addition to the APR, you should be aware of other potential fees that come with your card. Many credit cards charge annual fees, which are either waived during the first year or contingent on meeting a minimum spending requirement. Some cards have no annual fee, and others may charge this fee to cover the cost of offering perks or rewards.

Late payment fees are another important consideration. If you miss a payment due date, it can result in a hefty fine and accumulated interest charges. Furthermore, some credit cards impose cash advance fees, which can be quite high if you withdraw money from your credit card. The more you know about the additional costs that come with your card, the better equipped you’ll be to manage them and to consciously keep them from piling up unnecessarily.

3 It’s Best to Pay More Than the Minimum Payment

Paying only the minimum payment per month may seem like the most convenient option if you have a credit card, but remember that it can also cost you much more in the long run. The minimum payment is usually a small percentage of your total balance, often covering just the interest and a portion of the principal. If you continue paying only the minimum, your debt will take much longer to pay off, and you may rack up interest charges before you know it.

To avoid this, it’s advisable to always pay more than the minimum due. Larger payments will allow you to reduce your balance faster and minimize the amount of interest you need to pay. For example, if you have a PHP 20,000 balance on your credit card and the minimum payment is PHP 1,000, you may only be covering the interest, which could result in the debt lingering for months or even years. On the other hand, if you pay PHP 5,000 or more, you’ll significantly reduce your debt, and the interest charges will decrease.

4 Always Pay on Time

Timely payments are also crucial when it comes to maintaining a healthy credit profile. In the Philippines, late payments typically result in late payment fees, and more importantly, they can negatively impact your credit score.

Your credit score is an important factor that often determines your eligibility for loans, mortgages, and even other credit cards in the future. A late payment can remain on your credit report for up to seven years, which could hurt your ability to secure favourable financing terms. Knowing this, once you apply for a credit card, be prepared to meet the responsibility of always making timely payments for it.

5 Avoid the Temptation to Max Out Your Credit Limit

It may be tempting to max out your credit card just because you can, especially when you have a higher credit limit. But this behaviour can also be detrimental to your finances. High credit utilization—which occurs when you use a large portion of your available credit—can negatively affect your credit score and have long-lasting repercussions for your financial future.

Ideally, you should aim to use no more than 30 percent of your available credit limit. If you have a credit limit of PHP 50,000, try to keep your balance below PHP 15,000 to maintain a healthy credit utilization ratio.

Remember that applying for any credit card will be a significant financial decision on your part. It’s important to learn everything you can about various aspects of credit card management so that you can make the smartest possible decisions for your financial success. Be mindful of the insights above and refer to them as often as you need to once you hit the milestone of getting approved.

Bharat Kumar

Bharat is an editor and writer at The Next Tech. He focuses on sharing industry-first tech news and potential how-to(s) guides for a broad range of categories. Outside of his work, he received a Bachelor’s Degree in Business Administration, with a multitude of education certificates. He’s always up to learn new things, and a die-hard fan of Call of Duty Saga(s).

Follow us :