If you’ve held and managed your own credit card for some time, you’ll have experienced the usefulness of having access to credit firsthand. Perhaps having a credit card has helped you stick to your monthly budget or track your spending more efficiently. If you’d like to extend the benefits of credit to a loved one to see if it can help them manage their own finances, you can get them a supplementary credit card.
Before you start filing that application, however, it’s important that both you and your loved one understand how supplementary cards work and the effect they have on the primary cardholder’s account. This helpful guide contains essential information about supplementary cards in the Philippines and what you should bear in mind before getting one. Read on for all you need to know below:
What a Supplementary Card Is
Supplementary cards are secondary cards issued under a person’s credit card account. These cards are typically given to the primary or principal cardholder’s immediate family members—that is, their children, spouses, siblings, or parents. Some people also elect to grant supplementary cards to romantic partners or trusted friends.
Supplementary cards are most often used to share the principal cardholder’s credit benefits with loved ones who don’t qualify for credit cards of their own due to age, poor credit history, or a lack of regular income.
How Supplementary Cards Work
Though specific supplementary cards may function slightly differently depending on your chosen provider, supplementary cards in the Philippines all generally have the following features:
Different Card Details from the Primary Card
Supplementary cards bear the secondary cardholder’s name and come with their own credit card numbers, expiration dates, and CVV numbers. However, as supplementary cards are secondary cards, their balances, credit limits, and billing statements are still treated as part of the principal cardholder’s account.
Shares the Primary Card’s Credit Limit
A supplementary card’s credit line is an extension of the primary card’s. This means that if a principal cardholder has several supplementary cards under their account, all of them will share the primary card’s credit limit. If your monthly credit limit is PHP 100,000, for example, then the total monthly balances incurred on your primary and supplementary cards must not exceed that amount.
Making transactions beyond the credit limit also affects every other card under the principal cardholder’s account. If the account has hit its limit for the month, subsequent transactions by the primary and supplementary cards will either be declined or come with over-limit fees.
Some credit card providers give primary cardholders the option of setting lower spending limits per supplementary card so they can manage their total monthly debt more efficiently. If no such limits are assigned, a supplementary card’s credit limit will match that of the primary card by default.
Single Consolidated Billing Statement
Because a primary card and all supplementary cards under the same account share a single credit line, all transactions made with these cards are gathered under the principal cardholder’s monthly billing statement. The principal cardholder is thus also responsible for paying off the total bill at their bank each month.
As mentioned above, supplementary cardholders are frequently dependents of the principal cardholder who rely on them for financial support. If supplementary cardholders are not financially dependent on the principal cardholder, however, it’s common practice for them to pay their principal cardholder back informally each month for any transactions they accumulate on their card.
Same Rates as Those of the Primary Card
The primary and supplementary cards on a single account are typically charged the same interest rate per month. In practice, this means any unpaid debt on an account at the end of one month will be carried over to the next billing cycle and charged interest at the same rate. It’s good practice for primary cardholders to monitor spending limits and credit balances each month to prevent accumulated debt from piling up to an unmanageable extent.
Identical Benefits to Those of the Primary Card
In most cases, supplementary cards come with the same benefits associated with the primary card. If you have a co-branded credit card that offers perks like free travel insurance or special offers from partner merchants, for example, any supplementary cards issued under your account will also have these privileges. If your primary card is set up to earn rewards points, your supplementary card will also earn points under the same system.
How Supplementary Cards Differ from Primary Cards
Though a supplementary card will come with many of the same features as the primary card on the same account, it’s also important to be aware of how these two types of cards differ. The following are the most significant differences between a primary card and a supplementary card:
Easier Application Process
Applying for a primary credit card in the Philippines can be a complex process with many requirements, but the application procedures and requirements for supplementary cards are sure to be much simpler no matter your chosen provider. This is because officially, primary cardholders assume responsibility for all transactions made on any supplementary cards associated with their accounts.
As an example, while applicants for primary cards must be legal adults aged 21 and above, the minimum age to qualify for a supplementary card is 13. Supplementary cardholders are also not required to pass credit checks or provide any income documents. In fact, supplementary cardholders need not even be earning income to qualify, as in the case of primary cardholders’ financial dependents.
Cannot Redeem Rewards Points Earned
If you have a rewards card or a cashback card as your primary card, you can earn rewards points or cashback off your supplementary cardholders’ purchases. It’s important to note, however, that these points will be credited to your account rather than to your supplementary cardholder. Hence, your supplementary cardholder won’t be able to redeem or convert any rewards points their cards earn on their own.
Certain banks do allow supplementary cardholders to make redemptions with authorization from their primary cardholder. Primary cardholders can also share credit card rewards with their supplementary cards, which often happens in families sharing the same credit card account. Points earned from the family’s total purchases, for example, can be used to redeem perks and offers that benefits everyone, such as airline tickets for a family vacation.
Lower Annual Fees
In the Philippines, supplementary cards will either have significantly lower annual fees than principal cards or no annual fees at all. Annual fees on supplementary cards usually come to around half of the primary card’s annual fee. Some banks may also waive the annual fees on the first supplementary card of all credit cards they offer, while others may offer this privilege only for certain types of primary cards.
Who to Get a Supplementary Card For
Supplementary cards will be more appropriate for certain types of people or situations than others. As mentioned above, financial dependents such as teenage children, stay-at-home spouses, or elderly parents are good people to give supplementary cards. They’re also great for families or couples who want to work toward certain credit card rewards more efficiently or need an easy way to monitor spending.
Unemployed individuals, freelancers, and other people without a fixed source of income and financial documents could also benefit from supplementary cards. Lastly, a supplementary card is a good option for people who want an easy way to start using credit but don’t have the credit history to qualify for a primary card.
Regardless of who your supplementary cardholder is going to be, it’s important to make sure that they’re financially literate and responsible enough to hold a credit card of their own. You can determine if your loved one is ready for a supplementary card by checking for the following:
- They understand what a supplementary card is and how to use it – Your supplementary cardholder should understand that their access to credit via the supplementary card is not free and should thus be prepared to pay their debts on time. It’s best if they have some sense of how to leverage credit in pursuit of longer-term financial goals.
- They know how to budget – Determine if your loved one has a good grasp of how to manage finances. If they’re able to draw up a monthly budget for themselves and stick to it, that’s usually a good sign that they can handle a supplementary card. Maintaining a savings account and tracking their expenses judiciously are also good financial habits for them to have.
- They have a spending plan – Someone with a tendency to impulse-buy may not be a reliable supplementary cardholder. Check if your loved one is able to plan for their major expenses and has clear sensible purchasing priorities.
- They earn stable income – While this may not apply to financial dependents, it’s important for other people you intend to share your credit line with to have reliable sources of income. After all, you want to make sure they’ll be able to pay for the purchases they make with the supplementary card. If they can’t actually afford to pay for what they buy, you’ll have to cover the cost every month when the bills come in.
A supplementary card is a helpful financial tool that can help make life much easier for the people you love. As with any financial tool, however, it will be most helpful if your chosen supplementary cardholder knows how to use it responsibly. It’s important to ascertain both your own financial readiness and that of your loved one before you apply.