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Credit cards offer a quick and easy way to settle your bills at retail outlets, restaurants, travel expenses, and other payments that you might need to make.  You should always keep in mind that anything you buy using a credit card is bought 'on credit.' This means that you buy now but pay later, and if you aren't able to pay later, then you may find yourself in debt pretty quickly.

However, when used corrrectly credit cards offer many advantages. Some of these advantages may include cash backs, discounts, rewards points and air miles.

This is the Karlocompare.com.pk guide on everything you need to know about credit cards in Pakistan.

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A credit card is a type of loan assigned to the card, which means that whenever you buy something using your credit card, you're borrowing the money to pay for it from your credit card provider. Before you get a credit card, your bank will review your credit history and decide on the credit limit assigned to your card and its terms of use.

Your assigned limit is determined by your income profile, source of income, credit history and the the type of employment you are engaged in.

Credit history is a record of all of the credit you currently have taken out - this includes loans, credit cards, overdrafts, etc - as well as other information.

Your credit history  also reflects whether you pay your monthly bill on time or not. If you have a good credit history, the lender may offer you a lower rate plus other benefits.

At the end of each month, you will receive a bill from your credit card provider which shows how much you owe and where you spent the amount. It will also state the deadline for payment and the minimum payment you have to make.

If your application for a credit card is approved, your provider will inform you of the different details of your account, including your credit limit. Your credit limit is the maximum amount you can spend on the card or, in other words, how much you can borrow from the lender. Each bank has a different criteria set for different customers on the maximum credit limit it assigns to each borrower.

Credit card interest is shown as Annual Percentage Rate (APR) or Financing Charges. APR is the total cost of credit, shown as a percentage. It includes fees and interest. Interest rates for credit cards vary. Interest may be charged differently on retail purchases, balance transfers and cash withdrawals. Usually balance transfers have a lower rate and cash withdrawals have a higher rate.

Note: interest rates for credit cards are mostly charged on a fixed interest rate, which means that your interest rate might not change over the year until a new schedule of charges is released by the bank. Go through your monthly statement to keep track of the rate charged on your credit cards.

The interest rate charged for credit cards in Pakistan varies from bank to bank. Some banks may be able to give a lower interest rate based on their policies, your credit profile or other elements of your application. With credit cards, interest is charged on the outstanding balance, so it is best to pay off the full amount at the end of each month. If this is not possible, try to avoid just paying the minimum. If you pay just the minimum, the amount of interest you have to pay will increase by accruing and it will take you much longer to pay off your outstanding completely.

In the event of an Islamic credit card, the provider will charge a minimum fixed fee irrespective of the amount utilized on the card. Since Islamic finance works on different principals than conventional finance, it is forbidden to charge interest under Sharia principles of finance; thus the levy of a fixed fee in the case of Islamic credit cards.

Most credit cards will offer you a window between 30-45 day as an interest free period. This grace period is usually applicable to most transactions made on the card, and will only be extended if you are able to pay in full on or before the monthly payment due date.

As the main cardholder, you may nominate a second or third person to get a credit card and enjoy the same privileges extended to you. There is no income requirement to be a supplementary cardholder. However, supplementary cardholders need to be at least 18 years old. Any transaction made will count towards the total credit limit outstanding amount. Usually, the total limit assigned to the primary card holder is divided between the supplementary cards.

A secured credit card requires you to put down a  secure deposit for the credit card company. Secured credit cards are a good option if you want to build or improve your credit history. Taking a secured cash deposit against the credit card is a way for the bank to ensure that your credit will be covered in the event of non payment. You are still required to make your monthly payment and your deposit is only used as a backup to pay for the amount you borrowed.  Credit cards that are backed by a security such as cash at bank are usually given to individuals who the bank views as a high risk customer due to their age, income level, or employment profile; i.e. being 60 years and over, or lack of stable employment.

Any Pakistani citizen who meets the minimum criteria of the credit card issuer. Some of the general criteria's you will come across when applying are as follows:

- Income:  Each bank has a different policy with regards to minimum monthly income required to apply for a credit card. Credit cards with higher credit limits require higher minimum monthly incomes.

- Age:The minimum age required to apply for a credit card is 21, while people who are at least 18 years of age are eligible to apply for a supplementary card.

Some of the documents you will require to make an application are as follows:

- For Salaried Employees:

  • Pay slips
  • ID Card

- For Self Employed Professionals/Businessmen:

  • Bank Statements
  • ID Card
  • Business Documents in case of self employed businessmen

Interest is not the only fee you have to pay with credit cards, so it is important that you are aware of all the charges and fees you may need to pay when using the card. Not knowing about them could increase what you owe on the provider. Remember to check if there are any exemptions available for the fees elicited below before applying for a credit card

Annual fee

Balance transfer fee

Card replacement fee

Cash advance fee

Overseas transaction fee and currency conversion

Late payment fee

Over limit fee

Service tax

Statement charge

Supplementary card annual fee

In some instances, credit card providers may offer zero annual fees, or zero percent interest on balance transfer facilities. Be sure to check if these aren't promotions being offered temporarily. If they are offered temporarily, be sure to read the fine print to understand the implications, duration of offer and any other relevant conditions.

Finding the right credit to match your needs, requires you to be thorogh. Be sure to evaluate the conditional offers and any requiste requirements before you commit to applying or signing up.

 

With so many different cards all carrying varying benefits, how does one decide which one is the best for them? Before the introduction of our service you would have only known if you visited the provider's website. Even then every provider would only elicit the features that were good, while being subtle about the not so great features on their cards. Today we let you discover, compare, and evaluate the options in a easy and simple manner. You don't have to remain in the dark any longer. Use our service and find the card that meets your requirements.

 

 

A balance transfer facility allows you to transfer your outstanding balances from other credit cards to just one. When you enter in to such an arrangement you have the opportunity to qualify for a lower APR rate than usual. Some bank's may offer zero interest for a limited time to incentivize you to transfer your balances from your existing cards to the new card issuer. Offers such as these will generally come with an upfront processing fee.

 

 

Air miles are a loyalt benefit offered on credit cards. These are generally great for people who enjoy traveling. Through such a loyalty benefit you can collect air miles on every rupee you spend on your card. The air miles you accumlate on your card then can be redeemed for travel perks such as discount on air fare, train tickets, hotel discounts etc.

Reward points are the most popular loyalty benefit offered on credit cards in Pakistan. Reward points are points offered on every rupee that you spend on your card. The accumulated reward points can be then redeemed against gifts, discount offers, and other promotional items offered by the credit card issuer.

Some credit card issuers waive off the annual fee attached to the credit card. An annual fee waiver is usually given based on certain conditions such as spending a prdetermined amount set by the issuer within a certain period, or some other condition.

Premium privileges are offered to 'exclusive' cardholders, often platinum cardholders. Premium privileges may come as  access to exclusive airport lounges, 24-hour concierge service, premium club membership benefits, dining perks, and worldwide travel assistance - to name a few.

Islamic credit cards in Pakistan are compliant with the Sharia Islamic principles. There are very few islamic credit cards offered in Pakistan at the moment. Islamic credit cards do not charge an annual percentage rate (APR), instead they charge a fixed amount derived from the assigned limit. This amount is charged irrespective of the amount charged to the card.

Islamic credit cards in Pakistan are compliant with the Sharia Islamic principles. There are very few islamic credit cards offered in Pakistan at the moment. Islamic credit cards do not charge an annual percentage rate (APR), instead they charge a fixed amount derived from the assigned limit. This amount is charged irrespective of the amount charged to the card.

You may use your credit card to withdraw cash. Simply go to one of your credit card issuer's ATMs and withdraw the desired amount. There is a daily limit on how much you can withdraw using your credit card in a given day, and a total withdrawl limit. A total withdrawal limit permits you to only withdraw up to a certain portion of your total credit limit. It is, however, better to avoid withdrawing cash using your credit card wherever possible, as you will often be charged a cash withdrawal fee and then the APR on the amount withdrawn.

PIN stands for personal identification number, and you need your credit card PIN to withdraw cash. Sometimes you may also be asked to enter your PIN in shops, especially in certain countries. Make sure you memorize your PIN and do not share it with anyone.

 

A cash back is another form of loyalty benefit offered by credit card providers to motivate you to spend on your card. Cash back returns a percentage of the spent amont back on your credit card, so you save some money on your purchases. Cash back cards in Pakistan offer cash back on various types of spend that may include but aren't limited to fuel, grocery shopping, purchase of electonic items etc.

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