Is it wise/possible to survive without a credit card once you start working? - Seedly
 

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Asked by Perina C

Asked 6d ago

Is it wise/possible to survive without a credit card once you start working?

Do credit cards really live up to the hype?

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Kelvin Seetoh
Kelvin Seetoh, Founder at Kelvestor.com
Level 6. Master
Answered 6d ago

Definitely so.

However, I find that there are so many downsides when we do not use credit cards.

There are so many rebates and promotions going on. As an investor, I also studied how Visa/Masters work and the interchange fees they pass it back to the banks.

For merchants, they are charged a 2-3% fee by Visa/Masters. In order to maintain profits, merchants tend to levy it on the consumers by raising the prices.

Henceforth, the rebates you get are actually from your own expenses.

Just set automatic deduction or GIRO to your credit card and you'll be fine. Or set reminders on your phone.

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Kelvin Seetoh
Kelvin Seetoh

5d ago

Yes, Andy. Money goes to the bank and the bank gets to keep it.
Simon Soh
Simon Soh

5d ago

I was thinking the same Andy ! Thanks for giving some clarity on the topic Kelvin =)

Hi Perina,

Totally possible, but not recommended.

If you know how to maximize the benefits that credit cards bring to the table, then you are looking at a lot of value in having one. Sure, it does require a bit of homework, especially on miles card, but I wil quote my example of quadruple dipping to hopefully let you see what I mean:

Person A buys a couple of LJS meals at a CapitaMall. Spends $30 in cash. Goes home and eats.

Person B buys a couple of LJS meals at a CapitaMall. Pays with Favepay linked to Grab, earning 5% cash on Fave, Grab points, 120 miles from topping up grab balance with an eligible Credit Card, and 225 Capital$ for scanning their receipt under the CapitaMall loyalty program. Goes home and eats.

So you can see, by purely using cash, you leave a lot of value on the table. It's really recommended that if you can pay off your bills on time and track your spending and optimize it, you can definitely maximize what credit cards have to offer.

Merchants are already conditioned to take cards as a payment method. Just like how NETS levies a fee on the merchants, the payment networks do as well. That's why sometimes when you buy computer parts, merchants ask if you can pay by cash, because of the profit margins that they lose when you pay by NETS or even card. For merchants who don't do that, they've build in these margins into their pricing. You're effectively subsidizing others if you pay by cash in these instances.

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Zhen
Zhen

5d ago

Hi, noticed that you mentioned that you can get miles from topping up grab balance? May I know which card are you referring to? Because I use GrabPay a lot but my current CC doesn't not count GrabPay top up as a valid transaction
Kenneth Lou
Kenneth Lou

5d ago

Hello Zhen! U can use AMEX Krisflyer. That will get you miles for your topup up to $200!

Possible to survive without credit card ? Certainly, use Debit card and Cash! :) Or Top up credit card like YouTrip master card/ Revolute card and you can first top up before using them, they it will works like Debit card too!

Is it wise ? No. Because with credit card, you just need to :

1) Make sure you keep the $ and repay them fully before or when the bill comes.

2) Spending on Credit card gets cash back or miles get travellers to redeem full or part of the ticket. Unfortunately, cash back dwindle in the last 2 to 3 years, so everyone now mostly focus on miles card.

3) Interested in how to earn cash back or miles ? check out the seedly blog pages in the main website more and this Q&A to learn and ask questions.

All the best. Cheers!

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Aik Kai
Aik Kai
Level 7. Grand Master
Answered 5d ago

Of course it is possible! Cash is still king, despite what people say. Add a debit card to your wallet and you are ready to roll. Cash for point-of-sale transactions and debit card for app and online transactions.

Credit card, in a nutshell, is a double edge sword. Used properly and you reap rewards that banks lie on the table. Used improperly and debts are no joke, potentially spoiling your future to some degree.

All in all, it depends on how you approach money. If you are those disciplined type, I would say you miss out by not getting credit cards. Cashback, miles, points.. all these rewards that you can reap. Will be a pity to let them go.

If you are those spend whatever you have, cash and debit card will be better. At least you don't get into unnecessary debts and/or stress over money.

Cheers!

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Yong Kah Hwee
Yong Kah Hwee
Level 8. Wizard
Answered 5d ago

It is definitely possible. Whether it is wise or not depends on the following:

If you are able to control your spendings and ensure that you pay your bills on time, then it is definitely unwise to not use a credit card. Using a credit card can give you benefits such cashback, miles and reward points, which you can then exchange for flight tickets, vouchers, etc. Using a credit card also allows the money to stay in your bank for a long period of time (until you pay your CC bills), thus allowing you to get more interest if you're using a high interest savings account.

On the other hand, if you are unable to control your savings, then it is unwise to get a credit card. However, I believe that with some self discipline, anyone will be able to control their spendings! :)

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Of course it is possible to survive. Credit cards are relatively new in grand scheme of things (since the 1970s or so; so about 50 years whereas stocks have been around for hundreds of years).

If you undisciplined (spend too easily) then you will pay heavy interest/fees so maybe best without it but with the right spend/payment patterns you get gains from the promos so generally should take on the cards once ready.​​​

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Junus Eu
Junus Eu
Top Contributor

Top Contributor (Nov)

Level 9. God of Wisdom
Answered 6d ago

Definitely - I know a few who don't use credit cards.

That said, if one can pay monthly payments on time, I would say to use select credit cards to get the rebates/promotions/miles/cashback!

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Choon Yuan Chan
Choon Yuan Chan

5d ago

However sadly, they lose all the credit card cashback rewards if they can pay their bills on time
Isabel Wong
Isabel Wong
Level 4. Prodigy
Answered 1d ago

You definitely can survive - it's just a matter of whether you are making full use of your spending.

Credit cards usually have cashback/miles which are essentially discounts on your spending. Though in some cases due to the min spend requirements you may end up spending more, you can still choose miles/unlimited cashback cards with no min spend.

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Koh Jun Hao
Koh Jun Hao
Level 2. Rookie
Answered 2d ago

It is possible to survive without a credit card but is never wise. You will miss out on all the cashback, rebates, miles, bank promos like cashback boost etc. But remember, a credit card is a double edge sword. You need to understand how it works exactly before signing up for one and wielding it.

As Einstein famously said about compound interest: "He who understands it, earns it; he who doesn't, pays it." Same applies to credit card: If you understands it, you earn the rewards. If you don't, you will fall into debt and become the one who 'pays' for all rewards to those who does.

To me, using a credit card is just another convenient payment mode. What is enjoyable is that the banks pays me to use their services. All I need to do is to settle the bills on time. How great is that? And of cos, you got to know your limits and spend within your means.

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SW
Say Wai
Level 4. Prodigy
Answered 3d ago

Yes definitely. But why do you want to leave the possible points/miles/rebates on the table? just dont let the credit card rewards drive your spending.

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Possible. But it would make more sense if you have CC. Can enjoy lots of rebates and cash back. But must be cautious too. Do not overspend. If you are the kind of love to spend and do not keep track of your spending, i suggest dont go for CC.

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S
Sanchit
Level 5. Genius
Answered 4d ago

I find many people asking this question and especially relevant for fresh graduated from university.

Many people survive fine without cards. As much as we want, there are really handful of places which use ONLY CREDIT. Hence, survival isnt an issue at all.

Saying that, Credit is always more convinient - there is almost no doubt about it. All I would say is, maintaining a financial discipline is the key. ENSURE you NEVER (and I mean NEVER) take up credit card debt - if you're thinking of buying things on credit that you cant afford - DONT BUY IT. And if you feel you're one of those people who cant control yourself - probably this isnt a game worth playing :)

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MG
Michelle Goh
Level 2. Rookie
Answered 4d ago

Yeah of course you can! However, credit cards do give you some perks which normal debit card doesn't. There are a lot of rebate/promotions ongoing for different cards. The only thing you have to be careful is to only spend when you need to spend - and pay your bills ON TIME. You don't wanna pay just the minimum, and get charged a 20%/annum fee.. So as long as you are prudent about your spending, I would say it's the way to go :)

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Yanisa Koh
Yanisa Koh
Level 5. Genius
Answered 4d ago

Hi Perina, it is of course possible to survive without a credit card, whether you are working or not. Even for online purchases there are alternative options to pay.

However, there are many benefits to getting credit cards. Many cards have good promotions and tie ups with merchants, and some give you good rewards like cashback, points or miles. These can help you get more bang for your buck. However, you have to be very conscious not to spend over your budget, and make sure that you pay on time. These 2 things are not very difficult to do!

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JL
Jayden Lee
Level 3. Wonderkid
Answered 4d ago

Debit cards will work for you. Just that you don't get the cashback.. You will usually have a good estimate of your own expenditure after first 3 months of working anyway.

What are your concerns about owning a credit card?

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Depends on how you see it. Everyone is constantly talking about how much savings you get; rebates etc etc but if you do not pay off in full and on time(very important) you will end up paying more than the rebates you earned in the first place.

Based on statistics, the number of people with credit card debt are increasing - I believe most of them have the same mindset (rebates, earn miles etc) but end of month unable to pay it off. I'm not saying credit card are no good, it is beneficial only if you are not only confident to pay it off; but actually have the sum of money EXCESS in your bank account to pay it off in full and on time.

For myself, I cut all credit cards because I was tired of dealing with banks on annual fee and having to scrutinize my statements. I now load up my youtrip when I wanna use it.

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Adelyn K
Adelyn K
Level 5. Genius
Answered 4d ago

Yes, I believe it's possible as the concept of "Cash is King" still exists. And some places, e.g. hawker centres, only accepts cash.

But since you are going to spend money anyway, my belief is that you should make your money work for you. Work as in get cashback rebates, miles or points back in return that you can offset your expenses, or use the miles or points to exchange for more benefits. That's why I go for grab pay or credit cards as much as I can, cause I'm potentially getting more value from my purchases than with cash. :)

But of course, you will have to manage your finances more carefully after getting a credit card, and never spend out of your limit/income. If you are prone to excessive spending, getting a credit card is not wise. :)

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Takingstock @
Takingstock @
Level 6. Master
Updated 5d ago

Hi Perina

From studies, real life and some own insights

  • one spends less using cash than plastic (debit or credit card). When you use cash, you focus on the balance in hand / wallet, and so you tend to ration it. Studies show use of cash to trigger pain to the brain so you are very mindful of whether you are spending on is necessary. Using nets, debit or credit cards, it avoids this physical process of pain.

  • your credit score (a measure by finance companies) to determine whether you are credit worthy is however tracked through credit card or loan payment history. How it impacts you: a good credit score means you can potentially borrow more on loans, whether it is a housing loan, car loan, or just credit cards. Because you will either pay on time, so there is no write-off, or you pay somewhat enuf, on time, and they get to earn interest.

Not using a credit card means less data to compute the credit score. One of the potential downside is the bank may grant you a lower limit on the good type of loans eg housing, compared to someone who has a credit card and pays in full.

Extreme example for folks who are nearing bankruptcy after missing many payments, and already on a debt consolidation loan - your credit score will be severely marked down. One of the ways to repair it to a good standing... Is actually having a credit card or loan, and paying it on time. That will eventually improve your creditability and banks can consider lending you the "normal range" based on your income.

So yes you can survive without a credit / debit card, and usually you would spend less that way. But note the credit score in credit bureau.

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Hwee Kian
Hwee Kian
Level 6. Master
Answered 5d ago

Hi Perina,

It is possible to survive without credit cards, but not wise doing so.

As long as we make our payments timely, there are tons of opportunities we can seize and earn with credit cards, imagine savings from dining, online shopping, etc.

We just need to ensure we are not the group that defaults on payments or only make minimum payments, as the vicious cycle will continue and it will hit us badly before we know it. One tip is to enroll for GIRO so payments will be timely made without the need to remember when payments are up. ​​​

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Wilson Nid A Break
Wilson Nid A Break
Level 6. Master
Updated 5d ago

If you have been able to survive adulthood without a creditcard, i see no reasons why you cant survive once you start working.

Pros of using credit card even when you have no need for credit

  1. Build up your credit score

  2. Take advantage of rebates, occasional promotions

  3. Ability to make large-sized purchases with int-free installment payment by the merchant

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