Best Credit Cards In Sri Lanka For 2022 | Five Money (2023)

What is the difference between a credit card and a debit card?

A credit card helps you when you don’t have sufficient funds in your account to fulfil your needs or luxuries. As you use the money on 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, a 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 an ATM card which works according to your bank account. Through a debit card, you can withdraw or use only that much of the amount you have in the account. Whenever you use the debit card, your account gets debited, so make sure to maintain enough funds before paying for anything.

How do credit cards work in Sri Lanka?

Much like personal loans, credit card works. In Sri Lanka, when you buy something using a credit card, you borrow money from the card issuer, which needs to be repaid by the end of each month. You have to pay the whole amount you have borrowed, or else interest is charged on the 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 bigger debt.

Let’s read in detail about the components of how a credit card works:

For Purchases: To purchase anything using a 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. Enjoy a hassle-free shopping experience with a credit card.

Credit card repayment: Paying back the credit card money is essential, or you have significant debts at the end of the year. Also, if you don’t pay the total amount back within 30 or 50 days, the bank will charge some interest on the outstanding amount. To avoid paying the interest,’s it recommended to repay the whole amount or at least the minimum amount. Not paying back the total amount entitles you to pay extra costs.

Key benefits and features of credit cards

You can own a credit card and enjoy many benefits, such as short-term, zero-interest loans for every purchase, with no worry of carrying various currency denominations. It is a helpful alternative to cash.

It helps build the credit score/history, which will help obtain other financial services such as loans,s etc.
A grace period or a minimum number of additional days within which a cardholder can make his credit card bill payments without incurring any interest or finance charges is offered.

Credit cards give the cardholder the option to make payments in domestic and foreign currency.

Every credit card has a credit limit that is set on the card. This limit is determined after analysing the creditworthiness of the cardholder.

It offers various features, such as reward points, gift coupons, vouchers, cashback and extra discounts on purchases.

There is a specified credit limit for purchases and cash withdrawals with credit cards.

Credit card balance transfer allows the cardholder to transfer the outstanding balance in a credit card account to an account held at another credit card company.

Alternative to cash: It is always good to keep a credit card rather than taking liquid cash rather than carrying liquid cash. Firstly, it is safe, and you don’t have to worry about theft or robbery of money.

Emergencies: Aa credit card can help withdraw the cash immediately from any nearby ATM.

Making big purchases: You can also pay bills using credit cards. A credit card is a fantastic option to buy expensive things or make big purchases. With this, you can break down the big amount into manageable instalments. You can pay energy bills and phone bills with a credit card.

Build your credit score: If you want to take any loan in future, getting a credit card proves beneficial as it increases your credit score. The more loyal you are towards repaying your credit card dues, the more chances you have to build a good credit history. Not having a credit history prevents you from getting loans, as most banks reject such applications.

Welcome Offers: Many banks and financial institutions offer welcome discounts or rewards to lure customers into taking a credit card. These offers are for a limited time duration, so when you apply in that time, you get eligible to avail yourself of awesome welcome perks.

Reward Points or Cash Back: Every time you purchase your credit card, you receive a few reward points or a cashback reward credited to your account. The reward points can be accumulated to avail various gifts, while cashback rewards are directly applied to your card account. Reward points or cashback gets credited to your account whenever you purchase. These reward points can then be redeemed to buy something of that particular amount or used these points to pay back the used amount credit card.

Secure Transactions: Transactions performed by credit cards are secure and safe due to a feature called the chip and pin system. The payment gateway runs a two-tier authentication while making online payments through credit cards. Apart from the basic details, the cardholder has to enter an OTP to complete the transaction. However, this feature saves your card from any misuse as if anyone tries to do so, you will get an OTP, and that fraudster cannot complete the transaction.

Track your purchases: Keeping a proper record of cash transactions is complex,t but with a credit card, you can always download the monthly statement to see all the expenses and maintain a track record.

Misuse can ruin your credit score: Since your spending and repaying habits decide your credit score history, abuse must be avoided. In addition, if you are a latecomer in paying the credit card balance, it will affect your score.

What are the different credit cards categories in Sri Lanka?

Although Sri Lanka is still not a mature market around diversified finance products compared to the rest of the advanced economies, there are several categories of credit cards, each with different features and functions. In Sri Lanka, the following are the commonly found categories of cards you can consider applying for:

• Balance Transfer Cards: A balance transfer is transferring your debt from one credit card to another. This process is usually done to save on interest payments each month.

• Rewards credit cards: These cards reward you points for transactions made using your credit card. Reward points are redeemable for gifts, vouchers and other goodies indicated in the issuer’s reward catalogue.

• Cashback credit cards give you back a percentage of the amount spent, which is paid back to the credit cardholder.
  Low interest: These cards offer lower interest rates compared to conventional cards.

• Travel credit cards: These cards give you mile points for selected transactions. Mile points are redeemable for travel-related privileges, such as air tickets and seat upgrades with participating airlines.
  Premium: Premium cards offer promotions and privileges that focus on higher-end products and services.

List of banks providing credit cards in Sri Lanka

What is a supplementary card, and when should I apply for one?

A supplementary card is an additional credit card issued under the principal account holder’s name upon request. As the top account holder, you can decide to who to give the supplementary card to. However, an additional cardholder must be at least 18 years old, and most times, this is delivered to your spouse or your child.

A supplementary cardholder does not need to fulfil the minimum requirements per the principal account holder, which makes it a perfect option for your spouse who may not be working or your child who needs a card for emergency cases.

What is the difference between visa, Mastercard, and American Express?

Visa, MasterCard and American express do not issue credit cards; banks or financial institutions issue them. Visa, MasterCard and American express are known as payment networks, they are essentially the network systems that allow for the processing of credit card transactions. They earn money off each trade. As a cardholder, you won’t find significant differences between visa and MasterCard.

However, American Express (AMEX) is somewhat different.

As an overview, some of the benefits of these payment networks include:

Global customer assistance services 24/7 no matter where you are in the world so you can report problems or lost/stolen credit cards.

24/7 concierge services include helping you make last-minute dining reservations and flight reservations, to name a few, for the premium segment.

Exclusive deals and discounts to your card type & exclusive access to airport lounges, golf clubs, and premier hotel memberships
Globally accepted by millions of merchants around the world.

The global atm network allows you to withdraw cash when you need it.

Eligibility criteria for credit cards in Sri Lanka

The general eligibility criteria to avail of a credit card in Sri Lanka are as follows:

• If you are applying for a principal credit card, you must be above 21 years
• The minimum income requirement is lkr 15 000.
• You will have to submit the following documents while applying for a credit card:
• A copy of nic or passport
• Latest three months salary slip for permanent employees
• If you are self-employed, you must submit a copy of your business registration and the latest 6months bank statements.

How do I apply for a credit card in Sri Lanka?

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. Before approving a credit card, banks will verify your details, credit ratings, legal cases, payment history, and other relevant financial information.

Things to do before and ways to apply for a credit card

Do your research: You can find a suitable credit card based on your lifestyle and budget. Do some research and get one: Never miss out on checking the additional benefits you get with the card. Any charges or reward points must be assessed to determine if you need a credit card. You should know whether you will get any travel miles or cashback on your purchases.

Check your credit score: Credit card may get rejected or accepted based on your credit score, so make sure to maintain a good record with the bank. If you have a bad credit score, it will take at least six months to look good to the bank to approve your credit card.

Apply online or at a bank branch:
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Five.lk comparison portal: You can quickly search, compare and apply for your preferred credit card across any device. We intend to provide you with accurate & insightful information about financial products in the market.

Credit card agents: Sometimes, you may find credit card agents at famous, crowded places like supermarkets, shopping malls etc. However, it is pretty hard for you to compare and choose the best credit cards given the short time to communicate with these agents.

Credit card payments in Sri Lanka

You can pay the amount due in full before the due date; you will not be charged any interest. However, the right way to use a credit card is to make the payment in full each month. Then, when you aren’t set any claim, you can accrue substantial rewards. It will also help you build a good credit score when you pay 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. This is because 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. This is because the banks and credit card companies will wait for two billing cycles to determine if the interest will be waived off. Therefore, you must pay the balance in full before the due date; otherwise, you will not get the interest waiver if there is an interest from the previous month carried forward.

Reasons that your credit card may get rejected

If you have received a notice from the bank that your application has been declined, there could be a few contributing reasons. 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:

Insufficient supporting documents
Insufficient income level
Lousy credit score due to high debts or inconsistent loan payment pattern
Too many credit cards
CRIB credit report discrepancies

Ineligibility due to income: A credit cardholder has to have the required monthly payment, and if you don’t meet that, the card may get rejected. Every card issuer has different requirements, so search for issuers aligned with your income to get approval.

Residence/ Office location: Some banks have blacklisted areas depending on their customers’ activities so make sure you don’t come to that area while applying for a credit card. Your residence or office location plays a significant role in getting credit card issuance approval.

Incorrect Information: Incorrect, irrelevant or incomplete information can lead to rejection. The banks are extra cautious when issuing credit cards, so make sure not to give any wrong information. Double-check your documents and application form, or your request will be rejected without any notification.

Discrepancies in the credit report: Things take time to reflect in your account so before applying for a credit card, make sure to check your CRIB score and report to keep everything correct. Sometimes, your previous debts are still there, 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 lands you in a severe problem, and you are considered a risky customer if:

Too many loans: Having too many loans is a problem as the issuer doubts your worth and repayment capabilities.
Too many credit card applications: Another major factor that leaves the issuer in doubt is having applied for too many applications.
Excessive credit card usage: If you are a person who has the bad habit of carrying the monthly limit over to the following months, it is a wrong impression. Or if you excessively use your card up to 50% of the credit limit on various cards, your application is liable to get rejected.

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, and exhausting the credit card limit all lead to rejection. In addition, being financially unstable, i.e. using 50% of the credit limit on various cards or not having a minimum balance in your account, affects the credit score, impacting the credit card application process. Through your credit report, banks will be able to see your financial history for up to six months, so make sure your credit reports are updated from time to time and contact the credit rating agency if you need to update or make amendments.

Important things to consider before choosing a credit card

Although a credit card is quite handy, it can push you into 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
The interest rate
Credit limit
Fees and penalties
Balance computation method
Incentives

Spending habits: Before you take a credit card, you have to analyse 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 of carrying a balance from month to month, then a 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?

If you are a person who pays the bill on time and does the same for a credit card also, then go for a card without any annual fee and a more extended grace period. For you, interest rates don’t matter at all.

If you have the habit of carrying on the balance, you need a card with the lowest interest and introductory offers.

Take a credit card with a rewards program feature and a reasonable credit limit if you will make it the central part of your purchases.

A low-interest card is best for a person who will use it for emergency purposes.

The interest rate: The interest rate on a credit card depends on various factors. It is called an 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 charged from month to month, but in a variable rate credit card, the interest fluctuates. If you pay your credit card amount before or late or go over the stipulated limit, 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 you can spend in a particular duration, and the card issuer decides this limit. 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.