How and why to get a Thai credit card

PHUKET: I am so often asked by foreigners living in Phuket about how to obtain credit cards, that I thought it might be helpful to explain the how and why of the situation.

While some may be able to qualify for the traditional unsecured revolving card that we normally think of as a credit card, the normal situation is that Thai banks will have you deposit an amount slightly in excess of the credit limit into an account and freeze it as a guarantee on the credit. For example, if you deposit 100,000 baht they are likely to give you a limit of 90,000 baht.

Obviously, this sure doesn’t seem like a credit card arrangement, but more like a debit card, since it is in fact secured by your deposit. What’s the point then? Well, if you travel a lot like I do, you will find that a Thai debit card is rarely accepted when making online reservations at hotels and for booking flights in other countries. It is also tough to shop online with a Thai debit card, whereas the credit card makes it very simple.

The other benefit of a credit card is that there is a higher level of identity theft protection and information which could be possibly used to drain your bank account won’t be floating through cyberspace.

While I am on the subject, a good practice in today’s world of ATM skimmer gangs is to set up two Thai bank accounts, and they can be with the same institution. One account should be used to hold your significant baht holdings and you should never access an ATM with this account. Sign up for online banking and every few weeks transfer a bit of spending cash to your second account. Use this account when you go to the ATM and if you ever get skimmed, it won’t be so painful.

Back to the credit card situation, if you look at it from a bank’s perspective, it is far too risky to give unsecured credit to non-citizens or non-permanent residents who can easily vanish to another country and leave the bank in the lurch. To be frank, if your financial situation is such that a revolving line of credit at extortionate levels of interest is really needed, you are in big trouble. The only difference between a credit card loan and one received from a loan shark is that the bank won’t break your legs. It doesn’t mean it is any better of an idea.

Credit cards were originally charge cards, which were settled at the end of month. The purpose was to make business easier and avoid the risk of carrying around large amounts of cash. Of course, financial intuitions were quick to realize how profitable it was to let people run up a balance they couldn’t pay and then charge ridiculously high interest on that debt. If you are ever that short of cash, find some family or friends to give you a short term loan at a reasonable rate of interest. If you are that down and out that nobody will lend to you, you may need to consider a career change or going back home and getting some public assistance to get you back on your feet. If you just like to order gadgets and flights from the convenience of your smartphone however, a Thai credit card will meet your needs just fine.

David Mayes MBA resides in Phuket and provides wealth management services to expats around the globe, focusing on UK pension transfers. Faramond UK is regulated by the FCA and advises on pensions and taxation – email david.m@faramond.com or call 085-335 8573.

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