Working from home is a dream come true for many freelancers in the Phillippines. Although working online as a freelancer has many benefits, certain aspects of this dream life are not as desirable and sometimes not even detected until you are already in it.
One such undesirable aspect of being a Filipino freelancer is the difficulty of obtaining a credit card. Or at least the perception thereof.
Credit cards for freelancers in the Philippines don’t always come that easy, but it is much easier than people tend to believe.
In this article, we will explore the challenges and solutions to getting a credit card in the Philippines as a freelancer.
The benefits of credit cards for freelancers in the Philippines
The world started turning its back on cash decades ago, and the trend has been exponentially increasing. The first popular payment method that didn’t include notes and coins was cheques, but soon after, credit cards became more appealing as alternatives to notes and coins.
These days, there is a myriad of ways to pay for goods and services, ranging from credit cards to mobile payments, online payment platforms, and cryptocurrency. The Philippines is no different and is also moving toward becoming ‘cashless’.
Having a credit card not only allows you to pay for goods and services at both brick-and-mortar businesses and online, but it is also the key to other digital payment options. For instance, you need a credit card to open accounts on certain online payment portals.
But as you might have discovered, qualifying for a credit card is not always that easy when you are a Filipino freelancer. Permanent employees at organizations might have it a little easier, but there are also easy ways to apply for credit cards for freelancers in the Philippines.
Full-timers vs. Freelancers in the Phillippines
Getting a credit card as a Filipino freelancer is not as easy as being a full-time employee. Full-time employees at registered companies can use their contracts, payslips, tax statements, or HR statements as proof of income.
Fresh freelancers especially find it very hard to get a credit card in the Philippines. But don’t lose hope, there are ways and means to do so, and we are about to tell you just how.
Credit card application guide for freelancers in the Philippines
Open a bank account
Now you might be shaking your head and thinking: How can someone be a freelancer without even having a bank account? Although it is very rare, some freelancers work for local organizations and receive cash or cash cheque payments.
So for these freelancers, the first step would be to open a savings account or cheque account.
Maintain your bank account
Your bank will issue you a debit card that you can use for money withdrawals at ATMs, certain electronic payments (if the vendor allows debit cards), and also certain online transactions. A debit card does not go below zero. Unlike a credit card, you can’t have a negative balance on your account.
The downside to this is that debit cards don’t provide a financial safety net like credit cards. For instance, if your laptop decides to die today, you’ll need to buy one as soon as possible. People don’t always have emergency funds available, and that is where credit cards trump debit cards.
Maintaining your bank account and making sure that there is a decent average daily balance for at least a year will show the bank that you can manage your money well. In many cases, the banks will notify clients and ask them if they are interested in obtaining a credit card.
If your bank does not want to issue you a credit card for whatever reason, you can also try another bank by taking statements from the last three months and presenting them to another bank as proof of income. We will discuss proof of income more in-depth in the next section.
If you still haven’t received any notification that you’ve qualified for a credit card, you may also request an endorsement.
This is a long way around but quite efficient if you have no other means of proving your income and money managing skills. Depending on your specific situation, you might have other means at your disposal that could assist in obtaining your credit card faster.
Submit ‘proof of income.’
As we mentioned earlier in this document, for their credit card application, full-time employees can supply their employment contract, certificate of employment, or BIR Form 2316, which states the employee’s earnings and tax contributions. But for freelancers, this is not always an option.
Depending on the bank, you can also supply three months of payslips. Certain freelancer organizations provide their freelancers with detailed payslips that they can use for this purpose. But as you may very well know, income can fluctuate, and it will not always be the same month after month. This could also have a negative influence on the bank’s decision.
As a freelancer, you can also submit your income tax return (ITR), which is perhaps a better proof of income than the three monthly earnings statements.
Secured Credit Card
Getting a secured credit card is easier than a normal credit card, and it can do exactly the same for you. Normal credit cards and secured credit cards serve exactly the same function, but there is one difference. You need to deposit a certain amount as specified by the bank into a savings or cheque account, and the bank will then place this money on hold, which means that you won’t be able to touch that money without the bank’s say-so.
The bank uses this money for protection in case you can’t pay your bill at the end of the month or if you decide to flee the country without paying your bill. If you wish to close the account, you can settle your bill and request for the account to be closed, and your funds will be returned to you.
Typically, your deposit determines your credit limit. Between 80% to 90% of the hold-out amount is usually the limit of your secured credit card. Again, this is to safeguard the bank against default and to allow more people the opportunity to get a credit card.
- Even if it is not as easy as being a full-time employee, getting a credit card for freelancers in the Philippines is not as difficult to obtain as many believe.
- Getting a secured credit card is easier than getting a normal credit card for freelancers, but you’ll need to save up for the holding deposit that the bank demands. The deposit determines your credit limit. You’ll need to open a savings account or cheque account where these funds will be kept.
- You don’t necessarily need to submit an employment contract and payslips to apply for a credit card. Providing statements of a well-kept savings or cheque account or submitting income tax return statements could also suffice.
If you want to learn more about Neolytix and freelancing at our company, take a look at our article and learn more about working for a company that really cares about employees.
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