Here is Your Answer to Credit Card Processing Hurdles

Here is Your Answer to Credit Card Processing Hurdles

You've been in the workforce for so long now, you're super responsible with your bills and other adulting matters, and you can definitely handle having a credit card as a nifty tool for cashless purchases. But, for some reason, even after an arduous credit card processing experience, banks always seem to think you don't have what it takes.




Somehow, it hurts so much more than being friendzoned by your crush…

Enter pre-approved credit cards. Some people with luck on their side receive emails or phone calls from their banks, asking if they're interested in a credit card with a certain credit limit. Banks tout this as part of their "loyalty program." It used to be that banks would just send credit cards to their clients out of the blue, without them even receiving notice or going through the necessary credit application process. However, the Bangko Sentral ng Pilipinas has banned this practice. Credit card companies work around this ban by asking their clients first if they're interested in a credit card and then having them fill out an application form. In less than a month: voila! The client will receive their credit card in the mail.

What is a pre-approved credit card?

The BSP defines pre-approved credit cards as "unsolicited credit cards issued by credit card issuers to consumers who have not applied for such credit cards." For it to be a legitimate credit card processing application, the client's "intention and consent for the availment of the credit card must be clear and explicit," according to the BSP. Under this definition, pre-approved credit cards are prohibited, to encourage a more rigorous assessment of credit histories and financial capabilities. That's why banks now ask first for your consent and a credit application (even though they're sure to give you a credit card anyway). Most major credit cards engage in this practice.

Credit card companies would first send you an email or give you a call informing you that you're eligible to receive a pre-approved credit card. It can be the bank where you have transactions or accounts with, or it can be an entirely different bank. Banks have access to your credit information because of the Credit Information System Act, which makes basic credit data available for access by all entities in the Philippine financial system, so banks can easily assess your creditworthiness.

Once they get your consent, the agent will ask you to fill out an application form for credit card processing. Upon receipt of the credit card, it will be activated through your first swipe.

How can I get a pre-approved credit card?

You're more likely to receive a pre-approved credit card if you have a relationship with a particular bank, such as a well-maintained savings account, a time deposit account or an online banking account with regular activity, such as bills payment. Credit card holders and regularized employees at a reputable company are more likely to receive one as well. You may also be deemed a possible recipient if your bank account has a considerable balance or a high average daily balance. Some banks may also check your consumer activity, such as online flight bookings, and offer you a credit card that would allow you to earn miles.

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What is the easiest way to get a credit card if I have bad credit history?

Since BSP frowns on pre-approved cards, the easiest way to get a credit card is to apply for a secured credit card, which most big banks in the Philippines now offer. Especially if you have a bad credit history and don't like prepaid credit cards, then a secured credit card should be your choice. Applying for a secured card is the same as applying for a normal card, but faster! However, you will need to open an account with the bank of your choice and deposit money that you cannot touch and will serve as collateral for when you cannot pay the card's balance. In most cases, 80% to 90% of your deposited amount will automatically be your credit limit. Banks dictate how much deposit you should make, and in some cases, not every credit card has the same deposit requirements. Banks that offer instant credit cards or secured credit cards are BPI, RCBC and Security Bank.

What should I do if I receive a pre-approved credit card?

If you're one of those people who have been trying but failing to emerge victorious from credit card processing trials, then pre-approved credit cards will be a pleasant surprise for you. But don't get too excited! Once you receive that much-awaited call or email, first ask about the credit limit. Credit cards with higher credit limits or more premium kinds can have correspondingly higher annual fees, which can be a pain to cough up. Make sure that you can handle the payments and that you're truly financially responsible enough to make them on time. Analyze your budget and monthly income first and see if you have room for another bill coming your way. Ask thoroughly about all the perks, fees and fine-print caveats so you know what you're getting into. Better yet, use GoBear to see if it's a good card for you.

If you think you don't need a credit card because you've already got one (or a few), don't hesitate to say no to that tempting offer! For good measure, you can ask if you can be removed from their call list for other offers. If you still receive one in the mail, you can choose not to activate it by simply not using it. Also, consider reporting the incident to the BSP's Financial Consumer Affairs Group by calling 708-7087 or sending an email at [email protected]

Always remember: credit cards are tools. They increase your spending power, but not your income. In many cases, they represent spending money you don't even have in the first place. So when it comes to these little plastic wonders, tread lightly.

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