The Best Credit Card Decisions Start By Comparing Interest, Fees and Features. Compare & Apply Credit Cards from various categories such as Travel, Shopping, Rewards, Cash back, Premium, Balance Transfer, Benefits and Fees etc. Find the Best Credit Card for you - Fast, Simple & Clear Comparison.
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Rates last updated October 15th, 2019.
* Credit cards compared on this page are chosen from a range of credit cards five.lk has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. You must consider seeking independent financial advice and consider your own personal financial circumstances when comparing cards.
Compare & Apply Credit Cards from various categories such as Travel, Shopping, Rewards, Cash back, Premium, Balance Transfer, Benefits and Fees etc. To choose the right credit card for you, you need to look at how you plan to use it, your current financial situation and your future goals.
A credit card is a short term loan that is issued by financial institutions or banks to the account holders through which a person can pay for goods or services. To avail the facility of credit card, you need to have a good credit history with the bank and appropriate monthly income. Once the bank reviews both these things, it approves credit card and decide the maximum limit to be spent. The process is different for every individual and each bank has its own terms and regulations.
As a credit card gives you a good limit, it can be used for daily expenses or short term finances. When you are short of money in your bank account, you can use credit card as a substitute for expensive purchases. But to avoid any type of extra interest charges, the used amount has to be put back within 30 days of purchases or some banks provide 50 days facility to repay the credit money.
For long term expenses, credit card is not a good thing. The interests are really high if you fail to pay the credit within the stipulated time. Also, some credit cards charge 18% interest rate which is why you should avoid using it for long term. Rather go for a personal loan if need arises as you can get that at 5%, maybe.
Simply put, a credit card helps you when you don’t have sufficient funds in your account to fulfill your needs or luxuries. As you use money in the credit card, you have to pay it back later within 30 days and if not, you have to pay some interest by paying back the minimum amount. Plus, credit card has nothing to do with your bank account and you are free to spend up to the credit limit.
A debit card is also called ATM card which works according to your bank account. Through debit card, you can withdraw or use only that much of amount which you have in the account. Whenever you use the debit card, your account gets debited so make sure to maintain enough funds before you pay for anything.
There are many people & institutions who would recommend that you get a credit card, but before you do consider, it’s critical to provide yourself with the knowledge on how to use one to avoid getting yourself in an expensive pile of debt. A credit card can offer you many benefits through its features and can be a great tool to manage your finances and a credit card is a great alternate option for cash provided that you are able to repay the amount you spend each month. However, if you are not careful, you can get yourself into the credit card trap.
Our comprehensive guides on financial products such as credit cards, personal loans etc. will help you to equip you with the necessary information you need to avoid landing yourselves in huge amount of debt traps.
Much like personal loans, credit card works. In Sri Lanka, when you buy something using the credit card, basically you borrow money from the card issuer which needs to be repaid back by the end of each month. You have to pay the whole amount you have borrowed or else an interest is charged on unpaid amount.
Credit cards, no doubt are good to help manage your finances and can earn you a good credit score if used properly. But if you fail to understand how it works, you will find yourself trapped in a bigger debt.
Let’s read in detail about the components of how a credit card works:
For Purchases: To purchase anything using credit card is a simple process. You can buy things online or offline by entering the card details while making payments. For online purchases, provide your credit card details and the payment will be processed under proper security checks. The transaction may fail if you have exceeded the credit limit. To shop something at land based stores, you need to swipe the card or tap it at the payment terminal and the transaction will be processed with your signature or PIN number. Enjoy a hassle free shopping experience with credit card. Here are five parties involved in the entire transaction process:
Credit card repayment:Paying back the credit card money is important or else you will end up having big debts at end of the year. Also, if you don’t pay the full amount back within the grace period of 30 or 50 days, the bank will charge some interest on the outstanding amount. So to avoid paying the interest, it is recommended to repay the whole amount or at least the minimum amount. Not paying back the full amount entitles you to pay extra costs in the form of interest rate.
Despite the fact, Sri Lanka is still not being a matured market around diversified finance products compared to rest of advanced economies, there are several categories of credit cards, each with different features and functions. In Sri Lanka, following are the commonly found categories of cards you can consider applying for:
A supplementary card is an additional credit card that is issued under the principal account holder’s name upon request. As the principal account holder, you can decide who to give the supplementary card to. However, a supplementary card holder must be at least 18 years old and most times this is given to your spouse or to your child.
A supplementary cardholder does not need to fulfill the minimum requirements as per principal account holder, which makes it a perfect option or your spouse who may not be working or your child who needs a card for emergency cases
Visa, MasterCard and American Express do not issue credit cards, it is issued by banks or financial institutions. Visa, MasterCard and American Express are known as payment networks, they’re essentially the network systems that allow for processing of credit card transactions. They earn money off each transaction. As a cardholder, you won’t find big differences between Visa and MasterCard.
However, American Express (Amex) is somewhat different.
As an overview, some of the benefits of these payment networks include:
The general eligibility criteria to avail a credit card in Sri Lanka are as follows:
You will have to submit the following documents while applying for a credit card:
There are several ways to apply for a credit card in Sri Lanka and the card approval process usually lasts between one to two weeks. Banks will verify your personal details, credit ratings, legal cases, payment history, and other relevant financial details before approving a credit card to you.
Things to do before and ways to apply for a credit card
If you have received a notice from the bank that your application is declined, there could be a few reasons contributing to it. However, it is best to consult the bank to find out the specific reasons so you can resolve them quickly.
Several reasons which could lead to the rejection of your credit card application by the bank include:
Ineligibility due to income: A credit cardholder has to have the required monthly income and if you don’t meet that, the card may get rejected. Every card issuer has different requirements so search for those issuers who are aligned with your income to get an approval.
Residence/ Office location: Some banks have blacklisted areas depending on their customers’ activities so make sure you don’t come in that area while applying for a credit card. To get an approval on credit card issuance, your residence or office location plays a major role.
Incorrect Information: Incorrect, irrelevant or incomplete information can lead to rejection. The banks are extra cautious when it comes to issuing credit cards so make sure not to give any wrong information. Double check your documents and application form or else your request will be rejected without any information.
Discrepancies in the credit report: Things take time to reflect in your account so before applying a credit card, make sure to check your CRIB score and report to keep everything correct at your end. Sometimes, your previous debts are still there which have been cleared but not updated. In that case you might get rejection so before it happens, inform the authorities about the same.
Bad credit history: Having bad credit history definitely lands you in a serious problem and you are considered as a risky customer if:
Credit Score: The most common reason for the credit card application rejection is the credit score, as already told. Having bad debts, bad repaying habits, delay in making monthly payments, exhausting the credit card limit all lead to rejection. Being financially unstable i.e. using 50% of the credit limit on various cards or not having a minimum balance in your account affect the credit score which in turn impacts the credit card application process. Through your credit report, banks will be able to see your financial history of up to six months, so make sure you credit reports is updated from time to time and contact the credit rating agency if you need to update or make amendments.
Sri Lanka’s banks have recently raised the interest rates on their credit card and several other loan products as the Central Bank gave them the green light to price their loans to reflect market interest rates. Therefore, In Sri Lanka, credit card interest rates are commonly ranging in between 24 - 28% p.a.
You can pay the amount due in full before the due date, this way you will not be charged any interest. The right way to use a credit card is to make the payment in full each month. When you aren’t charged any interest, you can accrue substantial rewards. It will also help you build a good credit score when you are paying your balance in full every month.
If you are carrying over the balance for the next month, you will be charged interest on the balance. The interest for cash advances is higher than the interest charged on the purchases of goods and services.
If you wish to enjoy no interest on your credit card, you will have to pay the balance in full. The banks and credit card companies will wait for two billing cycles to determine if the interest will be waived off. You must ensure that you are paying the balance in full before the due date, otherwise you will not get the interest waiver if there is interest of the previous month carried forward.
Although credit card is quite handy, it can push you in a terrible condition due to inappropriate or improper use. Follow these things before you choose a credit card:
So when you choose a credit card, here are important things to consider:
Spending habits: Before you take a credit card, you have to analyze your spending habits. If you are a person who is fond of frequent shopping or likes to spend on luxury items but have the habit to carry balance from month to month, then credit card might take a dig on you. For what purpose do you want to use the credit card? Do you need it for emergencies or for every small thing you need?
The interest rate: The interest rate on a credit card depends on various factors. It is called as annual percentage rate which is of two types i.e. fixed and variable. A fixed rate credit card allows you to know the interest rate that will be charged from month to month but in variable rate credit card, the interest fluctuates. If you pay your credit card amount before or late, or go over the stipulated limited, even the fixed rate can change. Also, the card issuer can change the rate if he wants by notifying you about the change.
Credit limit: The credit limit is the amount which you can spend in a particular duration and this limit is decided by the card issuer. You can borrow any amount depending on your credit history with the bank. It is always suggested not to go close to the credit limit or else it will ruin your credit score and the bank will cut your limit to the minimum balance of your account. Also, if you go beyond the credit limit, a penalty is charged.
Fees and penalties: Penalties are quite a common scenario with a credit card as the card issuer never leaves any chance to take money from you. Transaction fees, balance transfers, cash advances, late payments or making payments by phone etc. are the common charges. If you intend to increase your credit limit, you have to pay some fee and if you go over the credit limit, then also there are penalty charges.
To save the fee or penalty charges, take the cards with reasonable fee or zero percent interest rates especially if you are not a regular card user. To get rewards program, you don’t have to pay extra fees.
Eric Tyson, author of personal finance suggests understanding all the rules and regulations before accepting a credit card to prevent horrendous situations. Never go for the card having huge fees even if the benefits are outstanding.
Balance computation method: The daily balance is added together which is then divided by the number of days in the billing cycle to calculate the finance charge. Some credit cards use two billing cycles to compute finance charge which costs you a lot of money in financing fees so stay away from such cards.
Incentives: Incentives are attractive no doubt, but they should be beneficial also. The card issuers in order to tempt you to use the credit cards give rewards programs and don’t charge for that. Always take a credit card that has flexible options of redeeming the reward points in the form of cash or travel. It’s also suggested looking for the restrictions of rewards programs before taking a card. The number of points on your purchases should be good and whether they expire or not must be carefully looked upon.
Finding the best credit card is not possible until you know the different kinds of cards. Since every person has different needs, the credit cards are different so there is no single best card in Sri Lanka. Instead, you should learn about these below mentioned factors to find the right card for you.
Every credit card has its own benefits for different people. Depending on your spending habits, there are a number of credit cards available. Also, it is important to know your pattern of making credit card bill payments to find the best card. So before you take a credit card, here are few features to consider:
Apart from knowing the benefits which you will get as a credit cardholder, other factors are also there to consider. While the basic features, application process and document requirements are must, you cannot miss out on other sections also. Here are few more things to consider when taking a credit card:
You must take into consideration the following while applying for a credit card:
Having a credit card seems attractive but before applying, there are few things to consider with open eyes. If you are a responsible person, it is good as you can enjoy buy-now-pay-later concept and also earn rewards and cashback. But if you have the habit of forgetting things, credit card can land you in a big problem. Improper management of the card causes you to pay huge interest charges and you end up with bigger debts later on.
Despite the fact, credit cards can be an effective alternative for cash along with all the benefits and features, there are some downsides that might turn you off as follows.
You must be responsible with your credit card. You must have strict finance discipline when you are using a credit card so that it will not result in an excessive debt. You must be aware of the following: