Having a credit card is very advantageous as you can enjoy numerous benefits, privileges, incentives, discounts, and promotional offers. However, a credit card also has certain disadvantages. Many people residing here in Singapore tend to worry about the usage of credit cards due to various factors.
You only need to keep yourself aware of the typical features of credit cards so that you do not get into any kind of trouble.
Why do Singaporeans worry about credit cards?
Let us now try to understand why Singaporeans have certain fears of credit cards. Some of the common credit card worries include:
- A credit card will put me in debt: A credit card is similar to a loan given by a bank for a short period. All your purchases will be paid by your bank and you will have to pay the bank at the end of each month. If you make unlimited purchases without keeping tabs on your account, you will get trapped in a debt situation. However, if you are careful while using your card, you do not have to worry about going into debt at all. People get into debts only when they fail to pay their card bills on time and when they use credit card cash advance without knowing its conditions.
- A credit card has many hidden charges: Most credit card companies charge fees such as annual fee, administration fees, late payment fees, etc. However, these fees are actually not hidden. If you read the fine print properly, you will be aware of all the fees charged by your credit card provider. Many Singaporeans tend to avoid reading the details about any credit card.
- The interest rates for credit cards are too high: The compounding interest rates charged for credit cards are very high. However, you can stay away from these rates by paying your credit card bill promptly every month. When you manage your debts efficiently, you will not incur any costs on interest rates.
- All credit cards are alike: It is true that all credit cards are plastic cards. However, that could be the only common feature among the various credit cards. Each credit card in Singapore offers different benefits, rewards, privileges, and cashback points.
- There are many fraudulent websites: When you use your credit card, you may visit many websites for making payments. Some of these sites can be fake and fraudulent. This is something to be careful about. Many people create fake websites by imitating real websites to cheat online banking users. This is known as phishing.
- I will feel like spending more when I use credit cards: Even when you are out of cash, you can buy products and services conveniently with a credit card. You may get lured into buying many things at one go. However, if you keep in mind that you will have to pay for these things later, you will not spend lavishly. If you remind yourself that these are not gifts, you will be cautious even while buying with a credit card.
- I may forget to pay my credit card bills on time: We agree that it is a pain when you forget to pay your credit card bill on time. However, this must not stop you from taking a credit card. You can use General Interbank Recurring Order (GIRO) so that you can pay your bills promptly. With GIRO transfer, your bank will pay your credit card bills automatically. All you need to do is keep adequate funds in your bank account.
- My credit score can reduce drastically: Many of you may worry that your credit score can go low if you have a credit card. However, the truth is your credit history will be low when you do not use a credit card. This will have a bad impact on you when you want to apply for a loan. When you approach a lender for a home loan or an auto loan, they can evaluate your creditworthiness only by checking your credit history. So if you use your credit card healthily and wisely, you can build a high credit score. When your credit worthiness is high, you can negotiate with your loan provider for better loan deals.
- I cannot ask my creditor for help when I am in trouble: Many people in Singapore wrongly assume that it is a sin to call their creditor when they are struggling financially. You may think that if you express your financial concern to your creditor, you will not be entitled to the privileges and benefits offered by your card. You may also be worried that your credit may file a legal case against you. You do not have to worry about any of these actions. Financial experts always advise that it is important you tell your creditor when you think you cannot pay your bills completely. Generally, creditors will try to give you suitable financial resolutions.
- If I have a credit card, I might have to go to jail: Are you worried that you may be arrested if you fail to pay your credit card bills on time? That is not true. When you find it difficult to pay your credit card bill, you will have to pay a penalty. However, you will not be asked to go to jail. You will have to face other legal punishments such as taking possession of your bank accounts or wage garnishment. You can avoid all of this by being a little cautious and wary while making purchases.
While using a credit card, you need to only focus on paying your card bills promptly every month. Many people will spread senseless points about credit card usage and discourage others. These points are just myths. Do not miss out on the several benefits of credit cards because of these myths. Make sure you get full clarity about the features of your card before you apply for one.