How to pick the right credit card for you

by Cathy Rose A. Garcia,

Posted at Mar 19 2013 11:07 AM | Updated as of Mar 20 2013 01:08 AM

MANILA, Philippines - With the many credit cards being offered in the market, how do you know which one is right for you? 

Teresita Lisama, head of the Bangko Sentral's financial consumer affairs group, offered some tips for consumers on how to choose the right credit card. 

In an interview with ANC's On The Money, Lisama noted the credit card industry is booming in the Philippines, with around 7 million active credit card users.

But sadly many consumers are getting credit cards without actually understanding what they're all about. 

Lisama said there are two main categories of credit cards: regular and premium. 

  1. Regular - basic features. Not much perks or rewards. Lower credit limit. Lower annual fees. 
  2. Premium - special perks. Higher credit limit. Higher annual fees. 

"The main difference is when you apply. For regular, the annual income requirements are low, so it's easier. The (premium) would require an income that is high," Lisama said. 

Before getting a credit card, Lisama said one should figure out the reason for getting one in the first place.

"If I were to choose what credit card to pick, the first question I should ask myself is why am I having this card. Is it for convenience or for payment facility or travel, like getting miles or points?," Lisama said. 

One should also compare the various credit cards to find one that "provides maximum benefits and will entail lower costs," Lisama said. 

For one who will pay all the transactions in full by the due date, Lisama said one should choose a card that does not have any annual fees.

One should also check the terms, credit limit, interest rate and other fees that come with a credit card. Lisama noted the BSP has received complaints about allegedly excessive credit card charges and interest from consumers.  

"Usually, it's an issue of information disclosure on how to compute (interest). Cardholders apply without knowing what to expect, what are the charges and fees, and when the billing statement comes, then bingo, they complain," she said. 

While it may be tempting to avail of the many credit cards being offered these days, Lisama said a responsible consumer should only have one or two credit cards.

And before swiping that credit card at the mall, one should make sure the purchase is something that can be paid with one's income.

"You should use the credit card only for your needs, not wants... Take a look at your income and make sure you can pay your credit card on time," Lisama said. "When you use your card, this is money. Protect your money, spend your money wisely."