What is a credit card? Conditions for opening a credit card

1. What is a credit card? Terms related to credit cards

What is a credit card? Below is the concept of what a credit card is and related terms: 

1.1. About Credit card

Credit cards are also known as Credit Cards. This is a type of bank card that allows the cardholder to spend within the credit limit that the bank has granted based on the agreement between the two parties. In other words, you are "temporarily borrowing" money from the bank to shop, spend in advance and will repay all or part of that amount at the end of the specified period. 

Cardholders can use credit cards to pay directly through POS machines, make online transactions through banking applications or link with e-wallets for convenience in spending. 

1.2. Related terms 

When you start learning about credit cards and how to use them, you will see common terms as follows:

• Credit limit: Credit limit is the maximum amount of money the bank allows the cardholder to spend during a credit cycle. This limit depends on the customer's financial situation and reputation at the time of card opening. 
• Credit interest rate: Credit interest rate is the interest rate calculated on the amount that the cardholder has not repaid on time according to bank regulations. 
• Credit card statement: A credit card statement is a detailed summary of the cardholder's spending or payment transactions in a specific statement period. 
• Minimum payment: Minimum payment is the least amount the cardholder needs to pay according to the statement notice to avoid being charged late fees or falling into the bad debt list. 
• Pay off credit card debt: Cardholders can repay debt by many methods, such as: Payment via Mobile Banking or Internet Banking, transfer from another bank account to a credit card, deposit money directly at the bank's transaction counter, link with another account and set up automatic payment. 
• Credit card annual fee: This is the annual fee that cardholders must pay to maintain and use credit card services. This fee ranges from 200,000 VND to 1 million VND, depending on the card service and policy of each bank. 

2. Types of credit cards 

Credit cards are divided into 4 main types based on the following criteria:

• Based on card class: Including 3 popular classes: standard card, gold card and platinum card. 
• Based on subject of use: Including personal credit cards (for individuals) and corporate credit cards (for companies and organizations)
• Based on intended use: There are types such as regular payment cards, loyalty cards, cash back cards or mileage cards. 
  • Refund card: This is a type of credit card that offers cashback when transactions occur. 
  • Points card: The card allows customers to accumulate points corresponding to payment transactions. Accumulated reward points can be exchanged for gifts or attractive offers. 
  • Mileage card: The co-branded card is especially suitable for frequent flyers, helping to accumulate flight miles based on spending value. These miles can be used for airline services. Cardholders also receive additional incentives such as free lounges and 0% interest installment payments when purchasing airline tickets. 
• Based on scope of use: Including domestic credit cards (used domestically) and international credit cards (used abroad). 

3. Functions of credit cards 

Credit cards are designed to provide maximum convenience in spending. If you are wondering "what is a credit card used for?", the answer lies in the outstanding functions it brings:

3.1. Postpaid payment

Postpaid payment is the main function of a credit card, allowing customers to use the allocated limit to pay in advance for expenses, then repay it to the bank within the specified time. Popular payment methods:

• Direct payment: Use the card at restaurants, hotels, supermarkets, cafes... by swiping the card or touching the POS machine. 
• Online payment: Pay shopping bills, electricity and water bills, apartment service fees or phone top-up... via banking application or e-wallet.

This function helps customers easily pay anytime, anywhere without using cash, while controlling spending and reducing financial pressure. 

3.2. Withdraw cash 

The credit card also supports cash withdrawals at ATMs, acting as an advance from the credit limit. This function is useful in situations where you need cash urgently or cannot pay by card. 

However, the fee for withdrawing cash from credit cards is often quite high, about 4%/transaction. Therefore, customers should consider carefully before using. 

3.3. Installment

Credit cards allow flexible installment payments for purchases at many stores and e-commerce sites. Popular products such as phones, laptops, TVs... are often supported in installments with diverse terms (3, 6, 12, 18 or 24 months) and interest rates from 0-10%/year. 

This is a special feature only available on credit cards, helping customers easily manage their finances when shopping for high-value products. 

4. Standards for individuals to open a credit card? Should you open a card or not?

To open a credit card, you need to meet the following 3 basic standards: 

• Be a Vietnamese citizen or a foreigner living in Vietnam, between the ages of 18 and 60. 
• Have a stable income to ensure the ability to repay debt on time. 
• Have a good credit history, demonstrated by on-time payments and are not currently in the bad debt group according to bank regulations (including 5 bad debt groups).

Can I get a credit card if I have bad debt? Normally, people with bad debt history in groups 1 and 2 can still open a credit card. People with bad debt history of group 3 or higher will face difficulties and limitations when opening a credit card, because most banks will refuse to issue cards. Can I open a credit card without proof of income?

So are you in the group of people who should open a credit card? SeABank gives advice to groups of people who should and should not get credit cards as follows:

• Individuals should not use: If customers only need to pay for daily necessities and want to use their available funds, they should not use a credit card. Debit cards are the right choice. 
• Individuals should use credit cards: If customers have a clear financial plan, need to make large expenditures, have a stable income and want to take advantage of loans from banks, then a credit card will be the optimal choice:

5. How to register to open a credit card

To register for a credit card, you can do so in 2 simple ways:

Method 1 - Register via online application 

Opening a credit card online via the Mobile Banking application brings convenience, helping customers save waiting time and simplify procedures. However, only customers who receive an invitation from the bank can use this feature. 

The process of opening a credit card online via Mobile Banking is similar between banks:

• Step 1 - Access the Mobile Banking application: At the main screen, if you receive an invitation to open a card, click "View details" and select the appropriate card type. 
• Step 2 - View card information: Slide down to see details of each credit card type. Once decided, select “Choose this package”. 
• Step 3 - Confirm card receipt information: Check and confirm the card receiving address via suggestions from Google or edit if necessary. Click “Continue” to complete. 
• Step 4 - Provide personal information: Enter income information, review all information and select "Confirm". Authenticate using biometrics to complete. 

Customers can track the progress of card issuance and delivery directly on the application. Card receipt time ranges from 3 - 14 days depending on each bank's regulations.

Method 2 - Register directly at the transaction office

To open a credit card directly at the transaction office, customers need to take time to make arrangements and go to the nearest transaction branch during business hours. The specific process is as follows:

Step 1 - Prepare necessary documents: Bring the documents required by the bank and go to the nearest transaction office or branch. Documents to be prepared include the following basic documents: 

• Personal documents: ID card/CCCD or valid passport. 
• Documents confirming residence: Household registration, temporary residence certificate or residence information in the area where the card is registered. 
• Documents proving income: May include labor contract, salary statements of the last 3 months, electricity/water/internet bills of the last 2 months, savings books or documents related to mortgage assets. 
• Card opening application: Application according to the bank's form for direct registration or online form when registering online. 
• Additional documents: The bank may request additional documents depending on specific regulations. 

Step 2 - Submit application: Inform the transaction staff about the need to open a credit card, present identification documents and records. 

Step 3 - Verify information: Bank staff will check and authenticate the customer's personal information. 

Step 4 - Choose card type: After the application is approved, the customer and staff agree to choose the appropriate credit card type. 

Step 5 - Complete the procedure: Sign the confirmation, receive the appointment letter and choose how to receive the card (at the branch or by mail)

6. Be careful when using credit cards

Using credit cards effectively not only helps with good financial management but also brings many benefits from incentives. Here are some things to keep in mind:

• Payment on time: Always pay in full or at least on time to avoid penalties and high interest rates. 
• Reasonable spending: Only use a portion of the limit for truly necessary needs to avoid falling into an uncontrollable debt situation.
• Track spending: Use financial management tools or applications to control transactions and plan spending appropriately. 
• Take advantage of these offers: Cardholders should not ignore programs such as cashback, points accumulation or discounts from partners to save costs. 
• Choose a credit card that suits your needs: Choose a card with limits, interest rates and incentives that suit your needs and payment ability. 
• Store your card carefully: Avoid losing your card or revealing information to others. If lost, contact the bank immediately or block the card via Mobile banking. 

7. Benefits and disadvantages of credit cards 

Should I use a credit card? To answer this question, you can look at the pros and cons below:

7.1. Benefits of using credit cards

• Help break up large payments by paying in installments: Card users can use credit cards to buy products such as TVs and laptops in installments,... vThis helps customers divide the shopping amount into payment periods, with the upfront price being only equal ⅓ - ⅓ product value. Installment payment via credit card is the ideal solution for those who do not have enough finances immediately but still want to own the product. 
• Building personal credit rating: Using credit cards and paying on time will help you create a "clean" credit history. This aids in large financial transactions such as home, car or other loans. 
• Be ready for emergencies: Credit cards help users quickly solve situations where they need money unexpectedly, allowing withdrawals of up to 80% of the card limit at ATMs. 
• Convenient payment: Credit cards have many flexible payment methods such as swiping cards at POS machines, paying online on applications/websites, via e-wallets or withdrawing cash at ATMs. 
• Expense management: At the end of each cycle, the bank will send a detailed statement of credit card transactions via email or Mobile Banking, helping cardholders check and adjust spending. In addition, when there is a transaction, you will receive notifications via text message or application to update your spending situation and financial balance promptly. 
• Receive many incentives: Programs such as cashback from 2-5%, discounts up to 50% and earning points and miles help save costs for users. Credit cards allow you to pay easily with deep discounts at many services, from restaurants to travel and shopping. 

7.2. Disadvantages of using credit cards

Although it brings many benefits, credit cards also have some potential disadvantages that need to be considered:

• Interest arising on late payment: If you do not repay the advance amount within 45 interest-free days, the spending will be charged interest, causing difficulties for users when finances are tight. 
• Fees when withdrawing cash: Withdrawing cash from a credit card usually incurs a fee of around 4%. vAbuse of this feature will increase costs, affecting personal budgets. 
• Money in the card can be lost when the card is lost: When you lose your card, you are at risk of being taken advantage of by thieves to make unauthorized transactions, especially when shopping online through sites that do not require an OTP code. This could cost you a significant amount of money. 
• Possible debt: Spending beyond the ability to repay debt will easily lead to bank debt, and even incur additional interest rates. This can put borrowers under serious financial pressure if they do not have good control over their spending. 

Thus, using a credit card has its own advantages and disadvantages. However, it is still very suitable for individuals and businesses who want to spend a large amount of money in a short time. 

8. Answer 3+ related questions about application cards 

Below is a summary 9+ Most frequently asked questions when learning about credit cards: 

8.1. What is the minimum credit card amount?

The credit card minimum amount or credit card minimum payment is the amount the borrower needs to pay each period to avoid interest penalties or falling into bad debt. If you only pay the minimum payment, the unpaid balance will be charged an interest rate of 20-40%, depending on the bank. 

Many people misunderstand that minimum payment is an advantage, but it is not. Making only the minimum payment helps you avoid penalties for late payments, prevent your card from being locked, and avoid bad debt. However, you still have to pay high interest rates on the unpaid amount. 

8.2. How much is the credit card annual fee?

The annual fee of a credit card depends on the card class and the issuing bank. For standard credit cards, the annual fee ranges from 100,000 - 200,000 VND. Gold credit cards have fees ranging from 200,000 VND - 1,000,000 VND. As for platinum credit cards, the annual fee can range from 300,000 - 1,500,000 VND, depending on the bank's regulations. 

8.3. How much money can be withdrawn from a credit card?

Usually you can withdraw from 50% to 80% of the card's credit limit. Suppose, you have a credit card with a limit of 10 million VND. If your bank allows you to withdraw up to 50% of your limit, you can withdraw maximum 5 million VND; or if the bank allows you to withdraw up to 80% of the limit, bYou can withdraw maximum 8 million VND. 

However, it should be noted that when withdrawing cash from this card, you will be subject to high interest rates and withdrawal fees. Therefore, you should only use this feature in cases where it is truly necessary. 

If you are looking for a credit card with high limits, safety and many attractive incentives, SeABank is the ideal choice. SeABank provides credit cards with flexible limits and diverse incentive programs such as cashback and shopping discounts at major partners. 

For customers who need to shop and make payments at home and abroad, the SeALady VISA International Credit Card is a great choice. SeALady offers many attractive incentives, competitive interest rates, suitable for many financial groups. For more details, customers can contact SeABank via Hotline 1900 555 587 or visit the website SeABank for advice on choosing the right service.

Thus, credit cards are a useful financial means, helping users manage spending effectively and take advantage of incentives, but they also need to be used cautiously to avoid unnecessary risks. Hopefully through this article, you have a clearer view of what a credit card is and how to use it wisely.