An average earning Singaporean has at least five credit cards for various needs and whims. Basically, your lifestyle will dictate which card you are going to get, however, how will you know which credit card yields the best shopping, dining and travel experience and which ones can potentially drag you to debt?
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Planning to get your first credit card? Here are the basic things you must know:
- Credit Card Approval depends on the bank’s set of qualification checklist.
Banks offer a lot of credit cards to choose from, and each bank has its own qualifications such as the minimum required salary and credit score. Depending on the bank’s discretion, it is important to check your eligibility first before starting the loan process.
- Make sure you pass your complete requirements for quick processing.
Banks are known to require a string of document to verify your identification and creditworthiness. Make sure all of your documents have consistent information such as your name, your demographic data and age. In case that there are some discrepancies or missing documents, your application will be put on hold or worst, declined.
- Credit card processing might take 3 to 10 working days.
Since every bank has different policies, the processing of your credit card will expectedly vary from one bank to another. You will receive your credit card a week or so after your application approval. To ensure the maximum speed of your approval, pass all the required documents in clear copies.
- Your credit limit can be as much as 4 times your salary.
Your bank will depend your credit limit on your annual income. Your credit limit may be as much as four times your monthly salary, yet it still varies as each bank has its own policy. Also, your credit score will be taken into consideration. A much as possible, keep your credit score in good shape by paying your loans diligently.
- Increasing your credit limit will depend on your income and credit score
If you think you have to increase your credit limit, you can ask your bank to review your application, however you must remember that it will usually depend on how well you have dealt with your credits in the past. Remember that the bank usually put your credit limit into an amount you can pay without straining much your finances. Pay your monthly bills on time and avoid inquiring for loans in short intervals.
- Missing your payment incur high interest rates
Credit cards are not charged with interest rates if you pay in full on time. If you paid only the minimum required payment, an interest rate will be charged together with additional fees. Though there are ways to take care of the growing overdue credit card bills, it is a big mistake to let it happen in the first place. It is better to avoid this situation to keep your credit score in good shape.
- You can apply for more than one credit card
You can actually get multiple credit cards from various banks at the same time, however it could get complicated as each card has its own repayment schedule to be dealt with. If you have a couple of credit cards from a single bank, your credit card charges will be reflected in just a single statement. This is easier to keep track of your payments. Be mindful of your spending and when your payment is due to prevent missing. Missing your payment will incur high interest rate plus a penalty charge.
- Effective interest rates are usually at 24% to 25%.
The effective interest rate (EIR) is the interest rate charged on your credit card. Each bank has its own way of computing the charged interest. When comparing the interest rate, it will be more accurate if you use the EIR per annum rather than the monthly rate. Be sure you read the fine print to understand the terms and be able to maximize the use of your credit card.
- You also have to pay an annual fee
Aside from the EIR, remember that you also have to pay the annual fee charged by the bank or your credit card provider. There are banks which do not charge the annual fee, take time to check if your bank waives the annual fee.
- Pay the balance in full to keep to a 0% interest
There are some Singaporeans who just pay the required minimum payment, however one must remember that the outstanding balance will still be charged with the interest rate. The longest you put off the payment, the more your debt will grow.
- Payment methods
There are various ways to pay your credit card bills. You can pay online, through your phone, have it auto deducted from your bank account or get down to the bank and personally pay over the counter.
- Minimum payment must be paid to avoid flunking credit score
In case you fail to your bill, you will be charged with the EIR and a late payment fee. However, if you pay the minimum payment, your remaining balance will be charged with the EIR without the late payment fee. Your payments will be reflected on your credit score.
- Not all banks allow credit card chargeback or the refund of payment or purchases
You have to read your credit card’s fine print to know if your cards are accompanied by a chargeback. The chargeback is a refund offered by the credit card provider in case you are not satisfied with it. Not all banks offer this, make sure you ask your bank if they have it.
Choosing the best credit card:
- Why are you applying?
It is better to clearly define why you are applying for a credit card to best know which one will fit your needs and not just your wants.
- Save money
In a way, credit cards give discounts in every purchase from the participating merchants by cashback. Basically, while spending, you are also earning cash.
- Rewards and free miles
This could be one of the main reasons why many use a credit card. Every time you use your credit card when paying for the things you usually buy, you are earning rewards and some even yields free miles you can use for vacation. You can earn as much as 4 miles in every dollar you spend.
- Borrow for free
You can take home the goods you buy just by swiping or tapping your credit card. Viola! No need for cash and there will be no interest rate to pay if you settle your bill on time. Not only are you paying up at ease, you are also keeping your credit score in good shape as there will be no accumulated debt.
- Free insurance
There are credit cards which give free insurance such as travel insurance, health insurance, car rental insurance, baggage insurance and others depending on the terms it comes with and the purpose the card is for.
- Slimmer wallet
Why do you have to carry a wad of cash when you can just use a card to pay for your shopping? A slimmer wallet is easier to take anywhere and it means a lighter bag to carry.
- A maximum liability of $100
If your credit card is stolen or lost, do not fear too much as you will only be liable for as much as $100, just make sure that you notify your bank as soon as you lost your card.
- What does your bank offer?
Banks offer various cards with different uses. Check what your bank has to offer to see which one fits you best.
- How is your spending habit?
Get the card that will help you save up and gain more from the purchases you usually do. It won’t be good to get a card just because of certain promos as these require specific purchases before you can avail them.
- What are the regular fees?
- minimum repayment
- annual fee
- introductory interest rates
There are actually a lot of credit cards to choose from, however the best credit crads are the once which do not make you buy things you do not naturally purchase. Choose the once that give you rewards and perks from the things you naturally buy with cash.
Need to make an immediate purchase but you have maxed out your credit cards? Get the best personal loan from Cash Mart now.
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