How to Apply for Secured Credit Cards in the Philippines
Can you apply for credit card and get 100% approval?
You can do that with secured credit cards.
In this article, we are going to talk about why secured credit cards can be an option for people who have difficulty applying and obtaining a credit card using the usual route at the bank.
What is a secured credit card?
A secured credit card is a credit card whose credit limit is guaranteed by a savings account or time deposit.
The cash deposit in the savings account or time deposit serves as a “security” or collateral for the bank or issuer against any non-payment in the future. Thus, it is not available for encashment.
In contrast, an unsecured credit card is the typical card variety that you see in the country. Banks don’t have “security” that the consumer debts are going to be paid on schedule.
Hence, they would like to know as much as they can about the ability of cardholders to repay before they release any new plastic card.
That is why aside from the application form and several required documents on income such as payslip, income tax, certificate of employment, banks would look at your credit history.
Your credit history is the profile built upon your payments on loans, debts and even utility bills with financial industry participant like lending institution, etc.
The better your credit history and the higher your take-home pay annually, the better your chances in getting a credit card.
How does secured credit card work?
In contrast, a secured credit card can be obtained without necessarily going through the process of background checks, credit history assessment, and similar evaluations.
All the banks need is a deposit in a savings account or time deposit and hold it out for the period of time the card is being used.
It hedges the risk of not only non-payment of any accumulated dues later on, it also minimizes the risk of the issuer in giving you access to credit card borrowing despite the fact usual assessment that measures your ability to pay back or your likelihood to default is not performed.
And if you choose to get your money back, the credit card must be closed. All outstanding dues must be paid, which can be done by deducting against the cash deposit.
Secured credit cards work exactly like a credit card, except in the manner of application as explained. You can use it for online shopping and cashless payments for your bills, at restaurants, businesses, etc.
How much is the credit limit of secured credit cards?
The hold-out amount determines the credit limit of the card. The maximum amount that you can borrow on the card is backed by the hold-out deposit. The higher it is, the higher the credit limit becomes.
Generally, the credit limit can be 80% to as much as 90% of the hold-out deposit.
Why get a secured credit card?
Secured credit cards are suitable to certain individuals and circumstances.
1. Freelancers and self-employed
It is quite tough for freelancers and self-employed individuals, especially those who are just starting out, to apply and get approved for a credit card.
That is so because they don’t have a means to secure a payslip or certificate of employment, proofs of a steady, periodic income stream.
More than that, income varies depending on the amount of work and the clients they got hired for their services month to month.
2. Those without proof of income but with cash for deposit
Individuals without any sufficient credit history are more likely to be turned down when applying for a credit card.
They can be people who are still in school, those who have just landed their first job, among other examples.
These individuals may fail the application process especially when issuers require specific length of time for job tenure or business to qualify.
Thus, a secured credit card can be an answer to address their consumer debt needs.
3. Those declined by banks
Individuals who are more likely to get disqualified may be those with low income or currently not working.
For example, an unemployed spouse may not want to get a supplementary card of the primary card owned by the significant other due to some reasons. And he or she wants to get a separate one for their own.
4. Those with bad credit history
Lastly, it can be appropriate for those trying to rebuild their credit history. They may have missed payments, existing debts, delinquent accounts, unpaid loans, default mortgages, etc.
They can restart by having a card that they can use and pay promptly to create a good payment history.
Advantages of secured credit card
What are the benefits of getting a secured credit card? Here are the pros and cons.
- Convenience. You get the convenience of using a card without the hassle of presenting proof of income and assessing your credit-worthiness.
- Approval. There is relatively high chance of getting an application approved. A few banks claim 100% approval rate.
- Rewards. Enjoy rewards program, gift certificates, discounts, air miles, ash rebates, etc.
- Credit. When you use the card and you instil the discipline to manage your money and debts, you can rebuild a bad credit history.
- Stepping stone. It can be a springboard to availing other financial services including bank loans.
- Upgrade. After you have demonstrated good payment attitude and debt management, you can request to upgrade to an unsecured credit card and release your hold-out cash deposit.
Disadvantages of secured credit card
And what are the disadvantages of owning secured credit card?
- No access to hold out amount. For as long as you are using the card, you cannot access your deposit. You can only get your money without any debts on the card and a clearance period of 60 days or more.
- Small interest. Your cash sits idle and earns small interest which almost always not nearly enough to address the rate of inflation each year. Thus, the money held out as collateral loses value over time.
- Less rewards. Your card may only be entitled to fewer rewards programs than with an unsecured one.
- Fees. Depending on the card that you get, there may be higher fees that you have to deal with.
- Credit limit. Your credit limit is set as a percentage of the deposit amount.
- Hold out. The hold-out deposit is only released when any balance is settled and the card cancelled.
Best secured credit cards in the Philippines
Here are the best secured credit cards in the Philippines.
- Asia United Bank Secured Credit Cards
- BPI Express Start
- BDO Secured Credit Card
- Metrobank Save & Swipe
- RCBC Bankard InstaCard
- Security Bank Fast Track
Asia United Bank Secured Credit Cards
All four credit cards that Asia United Bank offers to clients can be applied for as secured credit card. That means you can choose to open a savings account and agree that the deposit will be held out.
In effect, the credit limit is 80% of the hold-out deposit.
The type of card you get depends on how much you’re willing to put down as monetary guarantee. See the table below for the AUB cards you can get your hands on, deposit amount, and credit limit.
| NAME MINIMUM HOLD-OUT DEPOSIT CREDIT LIMIT | ||
| AUB Easy 25,000 20,000 | ||
| AUB Classic 50,000 40,000 | ||
| AUB Gold 125,000 100,000 | ||
| AUB Platinum 250,000 200,000 |
A few of the benefits that you get owning an AUB card are: ability to buy eGifts, online banking, bills payment, zero interest on new purchases, rewards program where you earn 1 point for each ₱20 spent, Mabuhay miles, complimentary airport lounge access, etc.
One other great benefit is that all credit cards have zero account annual membership fee for life.
- Cards you can apply: All cards
- Annual fee: Free
- Interest: 2%
- Late payment fee: ₱700 or unpaid minimum amount due, whichever is lower.
- Temporary Credit Limit Increase Fee: ₱300
So how can you apply?
- Go to the nearest AUB branch.
- Make sure that you prepare at least one valid identification card.
- Prepare the required initial deposit.
- Open any one of the three savings account from the table above.
- Fill out an AUB Credit Card Application Form.
- Fill out a Deed of Assignment to use the account as guarantee for you card.
- Processing can take up to 7-10 banking days.
BDO Secured Credit Card
Promising guaranteed approval, the BDO Secured Credit Card can be opened with either a savings account or time deposit. The initial deposit must be at least ₱10,000.
Credit limit is 90% for a peso-denominated account and 80% for a dollar-denominated account.
The release of the hold-out deposit is available 60 days after the card is closed and that the balance is zero. Any balance of past due accounts would be deducted from the deposit.
- Cards you can apply: All cards
- Annual fee: ₱1,500 to ₱5,000
- Cash advance fee: Php200 / USD 4
- Interest: 2%
- Late payment fee: 7% of overdue amount
- Overlimit fee: ₱750
How to apply
- You must be between 21 to 70 years old. Supplementary cards can be issued to clients who are at least 13 years old.
- Must possess a mobile phone number and/or landline.
- At least one valid identification card. For foreigners, copy of Employment Contract and Letter from Embassy, and Alien Certification of Registration (ACR) or Immigrant Certificate of Registration.
- Go to the nearest BDO branch.
- Fill out the Credit Card Application Form.
- Fill out the Deed of Assignment.
Metrobank Save & Swipe
One only needs to open a deposit account with at least ₱12,000 and they can get the Metrobank Save and Swipe.
The credit limit is set at 90% of the hold-out deposit.
- Cards you can apply: All cards
- Annual fee: ₱0 to ₱6,000
- Cash advance fee: ₱200
- Interest: 1.88% to 2%
- Late payment fee: Php850, USD 20, or 3% of outstanding balance, whichever is lower.
- Overlimit fee: ₱750
How to apply
- One must be between 18 to 70 years old.
- Have a landline number.
- Possesses a valid tax identification number, SSS or GSIS number.
- Any valid identification card.
- Go to the nearest Metrobank branch.
- Open savings account.
- Fill out the application form and signed deed of assignment.
- Wait for the delivery of the card. It usually takes two to four weeks.
RCBC Bankard InstaCard
The RCBC Bankard InstaCard allows you to determine the credit limit, which is 90% of the hold-out deposit. The minimum deposit is ₱10,000 for PHP account and USD 2,000 for dollar account.
More than that, all applications submitted are approved.
The card also comes with free annual membership fee on the first year, and a low fee years afterwards.
- Cards you can apply: All cards
- Annual fee: From free to up to ₱3,600
- Cash advance fee: ₱200
- Interest: 2%
- Late payment fee: Php850 or the minimum amount due, whichever is lower.
- Overlimit fee: ₱600
How to apply?
- You must be at least 21 years old and don’t have any delinquent account with the bank.
- Choose the RCBC credit card that you like.
- Prepare valid ID and the hold-out amount.
- Go to the RCBC branch near you.
- Open a savings deposit account. Make sure that you take note of the initial deposit and maintaining balance.
- Fill out the application form, saving account opening forms, deed of assignment.
- Wait for the confirmation and release of the card.
Security Bank Fast Track
The Security Bank Fast Track has 100% approval rate and quick turnaround time of only 3 days. When the card is issued, the annual fee is waived on the first year.
One can apply for as long as they can put up at least ₱15,000 in a savings account or ₱100,000 in a time deposit account. The credit limit is set at 80%.
You can only apply for Mastercard products only, and you are entitled to rewards and rebates.
Cards you can apply: Mastercard-logo only: Classic, Gold, Complete Cashback, Platinum, World, Next Mastercard
Annual fee: Free on the first year; range between ₱2,000 – ₱5,000
Cash advance fee: PHP 200 or USD 4
Interest: 2%
Late payment fee: 1.50%
Overlimit fee: ₱500
How to apply
- You must be between the ages of 21 to 65 years old.
- Must have a contact number, either landline or residence.
- At least one valid identification card. For foreigners, an Alien Certificate of Registration (ACR), work permit or Embassy Accreditation Papers.
- Prepare the minimum deposit.
- Go to any Security Bank branch.
- Fill out application and holdout agreement form.
Key Takeaways
Secured credit cards offers a lot of convenience to people who are having difficulties in applying for a regular credit card. We hope that this article has helped you out on choosing which secured credit card would work best for you!
Read More:
Credit Card Fees and How You Can Avoid Them
What are the Best Philippine Credit Cards With Zero Annual Fee?
What are the Best Credit Cards for Students in the Philippines?
