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Credit Card Terminologies Every Filipino Should Know

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Credit Card Terminologies Every Filipino Should Know

If you’re planning to get your first credit card in the Philippines, you’ve probably seen terms like “APR,” “billing cycle,” or “minimum amount due.” Confusing, right? 😅

For first-time users, understanding these terms is super important — one small mistake can lead to unwanted fees, high interest rates, or bad credit scores.

In this guide, we’ll explain the most common credit card terminologies in simple Filipino-English, with real-life examples so you can manage your card wisely and avoid common pitfalls.

1. What Is a Credit Card? 💳

A credit card lets you borrow money from the bank to pay for goods or services, then pay it back later. You have two options:

  • Pay in full → No interest charged ✅
  • Pay partially → Interest will be added ❌

Example:
You buy an item worth ₱5,000 using your credit card. If you pay the full ₱5,000 before the due date → zero interest. But if you only pay ₱1,000, the bank will charge you interest on the remaining ₱4,000.

2. Why Learning Credit Card Terminologies Matters 🧠

  • Avoid paying unnecessary fees
  • Understand how interest works
  • Manage your spending wisely
  • Build a good credit score
  • Choose the right credit card for your lifestyle

3. Essential Credit Card Terminologies (Simplified) 📘

Below are the most common terms every Filipino beginner should know:

3.1. Credit Limit

The maximum amount you can spend using your card.

Example:
If your credit limit = ₱20,000, you can’t spend ₱25,000 unless you pay off some balance first.

Tip: Stay within 30–50% of your credit limit to keep a healthy credit score.

3.2. Billing Cycle

The period when your transactions are recorded, usually 30 days.

Example:

  • Billing cycle: Sept 1 – Sept 30
  • Due date: Oct 15
  • All purchases made within the cycle will appear on your Sept statement.

3.3. Statement of Account

A monthly report sent by your bank showing:

  • Total amount due
  • Minimum amount due
  • Interest & fees
  • Transaction history

Tip: Always check your statement to spot wrong charges.

3.4. Minimum Amount Due

The smallest amount you must pay on or before the due date to avoid penalties.

Example:

  • Total balance = ₱10,000
  • Minimum amount due = ₱500
  • But paying only the minimum means you’ll still pay interest on the remaining balance.

3.5. Interest Rate / APR

APR (Annual Percentage Rate) = the yearly interest rate the bank charges when you don’t pay your balance in full.

Example:
If your card’s APR = 36%, that’s 3% per month. A ₱10,000 balance → ₱300 interest every month.

3.6. Cash Advance

Borrowing cash using your credit card, usually from an ATM.
⚠️ Warning: Cash advances have higher fees and interest rates than regular purchases.

Example:

  • You withdraw ₱5,000 using your card
  • Bank charges ₱500 cash advance fee + daily interest until paid in full

3.7. Late Payment Fee

If you miss your due date, the bank will charge a penalty, usually ₱300–₱700.

Pro Tip: Set up auto-pay or reminders para hindi ka makalimot.

3.8. Overlimit Fee

If you exceed your credit limit, some banks charge a penalty.

Example:

  • Credit limit: ₱15,000
  • You spend ₱16,000 → You may pay ₱500 extra fee

3.9. Annual Fee

A yearly fee charged by banks for maintaining your card.

  • Some banks waive it for the first year or if you meet a minimum spend requirement.

3.10. Rewards Points

Points you earn for every purchase, redeemable for cashback, gadgets, flights, or shopping vouchers.

Example:

  • 1 point = ₱30 spend
  • ₱30,000 spent → 1,000 points

3.11. Zero-Interest Installment

A promo where you can pay big purchases over several months without interest.

Example:

  • You buy a ₱12,000 phone at 0% installment for 6 months
  • You only pay ₱2,000 per month with no added cost

3.12. Grace Period

The extra days after your billing cycle to pay your balance without interest.

  • Usually 15–25 days depending on your bank

Example:
Billing cycle ends Sept 30, due date is Oct 15 → That’s your grace period.

4. How to Avoid Hidden Charges 💡

  • Always pay on or before due date
  • Pay in full if possible, not just the minimum
  • Avoid cash advances unless urgent
  • Monitor your billing cycle and set reminders
  • Choose a credit card with transparent fees

5. Use the Credit Card Cost Calculator 🧮

Before applying for your first credit card, it’s smart to check the real costs of owning one.

Try this free Credit Card Cost Calculator to:

  • Estimate monthly dues
  • Understand interest charges
  • See the impact of late payments
  • Compare secured vs. unsecured card costs

This helps you plan your budget and avoid debt traps.

6. Tips for First-Time Credit Card Users 🎯

  • Start with one card only to manage easily
  • Choose a card based on your income and spending habits
  • Check for hidden fees before applying
  • Use 0% installment promos wisely
  • Use the Credit Card Cost Calculator before deciding

TL;DR (Quick Summary)

  • Credit cards are useful but come with fees, interest, and rules you need to understand
  • Learn basic credit card terminologies like billing cycle, APR, minimum amount due, credit limit, and grace period
  • Always pay in full and on time to avoid penalties
  • Use the Credit Card Cost Calculator to plan your payments and avoid debt

FAQs About Credit Card Terminologies

1. What’s the safest way to use a credit card for beginners?

Always pay your balance in full and avoid cash advances.

2. How do I avoid late payment penalties?

Set up auto-pay or reminders, and always check your billing statement.

3. Is the minimum amount due enough to avoid interest?

No. Paying only the minimum avoids penalties but you’ll still be charged interest.

4. What is a good credit limit for first-time users?

For beginners, a ₱10,000–₱20,000 credit limit is manageable.

5. How can I check the total cost of using a credit card?

Use the Credit Card Cost Calculator to estimate monthly dues and charges.

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