Which Credit Card is Best For Me?

"credit card" by remundo is licensed under CC BY-SA 2.0 

I've encountered several questions about credit card types and which is a good one. There are also lots of resources that can be found online regarding use and type of credit cards from different banks in partnership with commercial institutions. You can also find several negative experiences with the use of credit card if not treated properly as well as security breaches associated with card utilization. I summarized categories of credit cards below.

Friend or Foe

Credit cards is a friend to those handling their finances and those who practice budgeting religiously. It pays rewards in terms of points or rebates that give us extra for our expenses. There are also promotions and offers exclusive to holders of certain credit cards like free meals, hotel discounts, and travels. It also comes with a monthly billing statement which in a way you can track your monthly expenses. If used properly, it is a medium where banks and financial institutions to check your credit worthiness in case you have pending loan applications or you wish to get loan for housing, car, or business needs. You will have a 30 day billing period which in a way like a short term loan without interest if paid on time. It is an enemy to those who don't have control over their budget and expenses. It will incur compounded interest charges if not paid on time. The bad debt records will stay against your name affecting credit score and credit worthiness. Like any other online systems, there are risks of security breaches if the card and account information is not guarded accordingly. 

Classification According to Rewards 

Cashback Credit Cards

These credit cards offers 0.5%-6% cashback rewards depending on where it will be used like groceries, dining, fuel/gas, medicines, and specific expense on certain establishments or stores. It is recommended to those spending high percentage on certain category mentioned.

Travel or Miles Credit Cards

This type of credit card offers more currency to points or miles conversions which can be used to claim airline miles and travel perks. Example conversion is 20-30 expense equivalent to 1 airline ticket mile. These cards also offer travel insurance whenever you purchase your tickets using the same cards. Multiplier  of reward points is also applied whenever the card is used outside the residence country. Some of these cards are offered in partnership with airlines. 

Dining Credit Cards

This card comes with more rewards if used in restaurants. Similar to travel cards there are multipliers of points if utilized for dining within the country of residence or outside.

Shopping Credit Cards

Credit cards that are offered in partnership with commercial establishments like shopping malls and online shopping sites. Rewards system is leaning towards more rebates, discounts and cashback to those using the partner services

Gas and Fuel Credit Cards

Usually offered in partnership with gas stations which offers more rebates for fuel expenses. Automobile companies have similar credit card partnerships with added perks in using services or buying car related products.

Credit to Cash Cards

Although majority of credit card companies have this offering, there are certain bank credit cards that is good for this purpose. Giving add on rates from lows of 0.39% to 1.5% per month for 80%-300% of your credit limits. This is ideal for businessmen who needs quick cash and extra liquidity during peak periods.

No Annual Fee Credit Cards

Some credit cards annual fee can be waived thru requests but other cards do not charge annual fees at all. There are several promos that waive annual fee for the first year, first three years, or for life but there are credit cards that offer free annual fee from the start but it does not provide other reward options similar to perks mentioned above.

Classification According to Payment Network

Visa

Is an american multinational company offering electronic fund transfers throughout the world. Majority of Philippine local bank credit cards is connected and use the services of Visa.

Mastercard

Similar to Visa, most of local banks use the services of Mastercard as a payment network. They also impose certain standards and policies with the use of their network for security and convenience of their customers.

American Express

American Express or AMEX is also primarily based in the United States of America. Although not famous in the Philippines, they have some of the top banks connected to their network.

JCB

An emerging credit card payment network in the Philippines which is from Japan. Although the reach of utilization is not yet similar to Visa and Mastercard. It is widely acceptable in the Philippines as their services is utilized by some of local top banks.

Unionpay

Similar to JCB it is an emerging credit card payment network which came from China. As China presence is now evident around the world so as utilization of this credit card network is growing.

Classification According to Eligibility, Credit Limits, and Payment Network Privileges

Classics

It is a the standard type of credit card whichever payment network offers. It is for those starting or entry level to credit cards with lowest monthly and annual income requirements but offer low to medium credit limits. The annual fees, if applicable, is also the cheapest. Range of income requirement is 15,000-25,000 pesos and annual fees from 1,000-2,500 pesos annually.

Secured

This type of card as the name implies is secured as the credit limit is equivalent to the required deposit in the bank. Recommended for those with history of bad debts and have difficulty of being approved for other types. It can repair the credit score of an individual.

Gold

Medium to high annual income requirements as well as credit limits. The rewards are also higher as most of the good rewards system starts with this type.

Platinum/Diamond/Titanium

Depending on payment network type, these cards offer high credit limits and better rewards or peso to points conversion compared to gold. However, annual income requirements to be eligible is also higher ranging from 40,000 pesos and above. Annual fees are also expensive starting from 3,500 and above. This card usually have access privileges to airport lounges and other luxury offerings.

Signature/Infinite

Offered to high income individuals and special clients under payment network Visa. It has privileges like  airport lounges access, worldwide concierge, hotel perks, car rental, gold clubs, and travel insurance 

World/World Elite

This is the equivalent of Signature/Infinite card in Mastercard. It has privileges like  airport lounges access, worldwide concierge, hotel discounts, car rental, golf clubs, insurance, and travel perks.

Which Card is For You?

The choice will depend on your income, rewards preferences, and spending habits. Don't just accept those pre-approved credit cards just because you opened an account or it is offered by the agent. Take advantage of limited offers and rewards. Compare the benefits of each type to your lifestyle and target reward. Spend, swipe, and tap responsibly!