Do you want to get into credit card shopping or already have a credit card? Well, it can be overwhelming and confusing at the same time. Especially if you’re new to this. It is good to know that there are a lot of people who don’t have credit cards. And there are even more people who do. But, only a small percentage of those who have credit cards use them.
That is the reason why you need to know everything about credit cards before deciding whether or not to get one. If you’re new to this, here’s everything you need to know about credit cards in Singapore.
What is a Credit Card?
A credit card is a card branded with a particular financial institution, retailer or other entity that can be used to purchase goods and services. The issuer of the credit card provides the owner of the card with a line of credit up to an agreed amount.
This line of credit is typically repayable over time, in instalments or through deferred payment. Credit cards will allow the holder to borrow money at a much cheaper interest rate than if they had to take out a loan via a bank or savings account.
How do credit cards work?
Credit cards work similarly to debit cards. You put money in your card, and when you spend that money, the amount is subtracted from your bank account balance. The difference between credit cards and debit cards is that a credit card has a limit on how much you can spend before you must pay the whole amount of what you spent back.
What are the requirements to apply for a credit card?
A credit card is not just a debit card or an ATM card. It’s actually a loan that you can repay in cash through regular monthly payments. In order to apply for a credit card, you will need to have a bank account in Singapore and also have a Social Security Number or resident identity number. For those who are applying for the first time, they will be required to show their salary slips or payslips as well as their NRIC.
They will also be required to show proof of residences such as utility bills and S-registrations. Now that you know what the requirements for securing your own credit card are let’s talk about the different types of credit cards in Singapore.
Types of Credit Cards in Singapore
There are a lot of different types of credit cards in Singapore. The most popular types are:
- Debit cards
- Credit cards and debit cards
- Prepaid cards
- Reward point credit cards –
- Reward cashback credit cards.
Before choosing which card works best for you, it is important to consider a few things.
Factors to consider when choosing a credit card
There are a lot of factors to consider when choosing a credit card. From the fees and interest rates to how you can earn rewards points and redeem them, there are many things that you need to know about credit cards. There is no perfect card for everyone, so it’s vital that you make careful considerations before deciding which one to get.
How to apply for credit cards in Singapore
First, you need to know the different types of credit cards. There are three main credit card types in Singapore. These are Visa, MasterCard and American Express Cards. You can apply for any of these, depending on your needs and budget. Secondly, you’ll need to see what type of credit score you need to have before applying for a credit card.
If you have a low credit score, it is recommended that you first pay off all your debts before applying for a new card. Thirdly, know the restrictions on the cards that you want to apply for. There is some sort of restriction on each credit card, such as no annual fee. Before you apply for a credit card, they’re a few things you should know about owning one. For example, you need to know about credit card limits.
What is a credit limit?
Credit limits are the maximum amount of credit you can borrow. If your credit limit is $1,000 and you want to borrow a total of $2,000, then you can only borrow up to $1,000 from your credit card company. The balance will be paid back in monthly instalments. Just like every other thing, owning a credit card has its pros. Let us see what some of the advantages of owning a credit card are
Advantages of having a credit card
Having a credit card can be beneficial to your personal finance in the following way:
- It helps you obtain credit easily. This way, you can easily build up a good credit score.
- You can borrow money using your credit card. Because the bank has details about your financiers and credit score, you can easily get loans at convenient rates.
- It allows you to earn rewards. This is possible by refilling your credit card and making payments on time.
- It helps you save on interest payments.
- You can make payments online. Credit cards make shopping and business transactions convenient, professional and fast.
- You can get travel insurance from your credit card company.
- It gives you access to cash when need be. This helps you settle emergencies with no stress.
Here are just a few reasons why you should consider getting a credit card. By now, you are probably already settled on how and what type of credit card to apply for. Let us talk about how to activate your credit card.
How do I activate my new credit card?
You will need to activate your credit card as soon as you get it. You’ll be able to activate it online or by calling the customer service line. It is important that you do so within three days of getting the card. If you don’t, the card might expire, and you won’t be able to use it anymore.
How Do You Earn Rewards With a Credit Card?
If you use a credit card to purchase items, you will earn rewards points or miles. This can be very helpful in the long run. You may also earn cashback or discounts on products and services that you typically buy. These rewards are different depending on the credit card company.
Conclusion
Credits cards are a great way to get on with your day-to-day Mindy transactions, be it personal or business-oriented. And there are plenty of other reasons why you should get a credit card. But keep in mind that there are things you need to be disciplined about, Luke your credit score limit. With the information provided in this article, you are sure to get a good footing on what type of card to get and how to manage it.