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    How to manage your first credit card in Singapore

    Did you know that credit cards can help you save money, if used in the right way? Credit cards can be a saviour if you adopt healthy credit card habits. If you are a beginner and just received your first credit card, it is important for you to know how to use it wisely to avoid drowning in a sea of debts.

    Credit cards in Singapore are only as harmful as you make them out to be. Credit cards let you earn rewards points, discounts or air miles with every dollar you spend on them, unlike paying in cash. If you have the correct credit card habits in place, it is easy to use them to your advantage.

    Below are some useful tips to manage your credit card better:

    Know why you need the credit card: Make sure you know the reason for owning a credit card as signing up for it on a whim may create issues for you in the future. There are different types of credit cards with various offers for different types of expenditure. Hence, you will be required to choose a credit card that best suits your needs.

    Find out the best credit card: There are no perfect credit cards in the market. The best credit card can be found if the perks and benefits suit your requirements. A little research and smart thinking can help you in selecting a useful credit card. Choose a credit card by checking the following points:

    Create a budget: Having a budget is very important if you are a first time credit card user. Make a monthly budget for things you need to purchase with your credit card, while keeping aside a small margin for unexpected expenses.

    Ask for an annual fee waiver: Many credit cards give the benefit of waiving off the annual fee for the first few years. In this case, you do not have to pay a single cent as a cardmember in the beginning. If you are billed, call the customer representative of the bank and request them to waive off the fee.

    Sign up when there are attractive bonuses: Keep a lookout for credit cards with good benefits and sign-up bonuses. If the promos are attractive and the credit card has no annual fee, then go ahead and sign up.

    Avoid spending more than you earn: The most accessible credit cards in Singapore require you to earn S$30,000 or more p.a., which comes up to a monthly income of S$2,500. You should not spend more than your monthly income as this would lead to huge bills with high interest rates.

    Do not withdraw cash from your credit card: The facility of taking short-term loans by withdrawing cash from credit cards should not be opted for unless absolutely necessary. Cash withdrawals attract huge interest rates, and the banks also levy a cash advance fee on the amount you withdraw. If you are facing a cash-crunch, it is advisable to look at personal loans with low interest rates.

    Don’t pay just the minimum amount too often: Try to clear the entire bill every month. If you pay only the minimum amount due every month and carry forward the outstanding amount, then you will have to pay an interest along with the remaining amount. This may result in huge credit card debt.

    Pay your bills on time and avoid being a defaulter: When you get your credit card bill, note the due date and set a reminder for yourself. If you fail to pay on time, then you will be a defaulter and a late payment fee will be charged.

    Use a secured transaction site: When you input your credit card information on a website, that information is transmitted through the internet, putting your account under threat. To secure your account, check the encryption software the website uses. In case if you are unsure of the software, ask for an alternate payment option.

    Go through the fine print: The card member’s agreement hold valuable information like special discounts, promotional offers, terms and conditions regarding the cash back, rewards and miles and so on that will help you have a better understanding of your credit card.

    Keep a check on your credit limit: The maximum amount that can be spent using a credit card is called a credit limit. Restrict your credit card usage to not more than 30% of the credit limit. This will help you pay your bills on time and in full.

    Be aware of your credit score: Once you get a credit card and start using it, the Credit Bureau Singapore (CBS) will record all of your credit card activities and personal financial information. Based on such behaviour, the CBS will make a credit score and a report, which will determine your creditworthiness. This credit score is very important for future loan and credit card approvals. Hence, it is vital for you to maintain a good credit score by paying bills on time and avoiding to overshoot the credit limit.

    Bottom line:

    Scrutinizing just the terms and conditions of your credit card is not the only aspect that matters. Other aspects leading to customer satisfaction like benefits and services, billing cycle, problem resolution, interaction between you and your credit card issuer, and rewards should matter too. Hence, look at a credit card as a whole package and then decide which the best is for you.

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