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How Do Credit Cards Work?
A credit card is a card issued by a bank that essentially enables you to borrow money from it. This allows you to spend on purchases in the form of borrowed credit now and make payment later, at the end of your billing cycle. However, missing your monthly payment subjects you to a hefty interest rate penalty on your bill.
Credit cards also often come with reward structures that entitle you to benefits when you spend on your credit card.
Types of Credit Cards in Singapore
Here are four types of credit cards that you should know of before deciding which credit card type best suits your lifestyle:
Credit Card Type | What Is It | Suitable For |
|---|---|---|
Cashback | Cashback cards reward cardholders with a percentage on the total amount they have spent on the card. This percentage of money accumulated can then be used to offset your next credit card bill. | Ideal for those with predictable and consistent spending habits, as cashback cards often have minimum spending requirements to qualify for cashback rewards. |
Cash rebate | A close sister of cashback, cash rebate cards reward cardholders with cash into your card that can be used to offset your next purchase. | Ideal for those with predictable and consistent spending habits, as cashback cards often have minimum spending requirements to qualify for cashback rewards. |
Air miles | Air miles credit cards enable cardholders to earn air miles for every dollar spent on the card, though miles earned differ between cards. You can redeem your air miles for flight tickets. | Ideal for frequent travelers and high spenders, as air miles will accumulate faster to enable redemption. Most air miles credit cards also do not usually specify minimum spending requirements or impose caps on the air miles you can collect, so that’s a bonus! |
Rewards | Rewards credit cards let cardholders earn rewards points that can be used to redeem gifts, vouchers, and even air miles, from their partnering merchants. | Ideal for moderate spenders who would like the flexibility to decide what to redeem your points for – air miles or vouchers/gifts. |
Find Out About the Different
Best Credit Cards in Singapore to Suit your Every Needs
Here are some recommendations to help you pinpoint the credit card to suit your lifestyle and spending habits.
Credit Card Types | Recommended Credit Cards | Why Are These The Best Credit Cards? |
|---|---|---|
Best Miles Credit Cards | If you’re looking for the best miles credit card, some of the things you need to consider are the miles per dollar (MPD) earn rate and also whether the miles expire or not. | |
Best Cashback Credit Cards | A good cashback credit card has a high cap for cashback earned without much in the way of restrictions such as category spend caps or minimum spends. | |
Best Rewards Credit Cards | The best reward credit cards offer the widest range of redemption options for the widest category of spends with the least restrictions. | |
Best Student Credit Cards | A good student credit card has little to no minimum income requirement and low credit limit while providing the best benefits and rewards that cater to young adults. | |
Best Credit Cards for Groceries | The best grocery credit cards offer cardmembers exceptional rates on either grocery spend or spends on specific supermarkets or grocery stores. |
Credit Card Fees You Need to be Aware of
More often than not, your credit card will come with additional charges. It's imperative that you read the fine prints, so don't get blinded simply by credit card perks!
Fees / Charges | Description |
|---|---|
Annual fee | Annual fees are a yearly charge by banks on cardholders for the convenience of owning a credit card. Most banks typically offer an annual fee waiver, especially if you have been regularly using your credit card. You can request for a waiver by calling your credit card issuer. |
Balance transfer fee | A balance transfer fee is charged when you transfer your credit card debt from one card to another card. You will be charged a transfer fee of around 2% to 4% of the amount transferred. |
Cash advance fee | A cash advance fee is charged by the bank for withdrawing money from an ATM using your credit card. This fee is usually charged at 6% on the amount drawn. |
Foreign transaction fee | A foreign transaction fee is a surcharge imposed on overseas purchases – both abroad or online. Banks usually charge a 1% to 3% fee of the transaction made. |
Late fee | A late fee is a penalty fee imposed by banks when you fail to make timely repayment of your credit card bill. While banks do offer a grace period of between 21 to 25 days to make payments, ignoring this window is an expensive mistake you do not want to make as interest rates hover around a heft 24% of the amount owed. |
These are other credit fees that you need to know:
How to Choose the Best Credit Card?
Choosing a credit card can feel overwhelming when there are so many credit card options in Singapore. While not all credit cards are created equal, each credit card has its pros and cons. Ultimately, finding the best credit card is dependent on numerous factors, but especially your spending habits and lifestyle. Before committing to a card, here are four simple steps to guide you through choosing the best credit card:
- Lifestyle and spending habits: Evaluate your current lifestyle (e.g. income, disposable income, financial commitments etc.), preferences, and spending habits. This is a key step in determining what type of credit card will be of greatest value to you.
- Credit card rewards: Are you a frequent traveler? Do you have a predictable and consistent spending habit? Can you identify a particular category (e.g shopping, dining, grocery) which you spend more in? Familiarising yourself with credit card reward structures will better allow you to identify the right card to complement your needs.
- Understand the fees and check terms: It is imperative to check all the fees, terms, and conditions of your credit card before committing to it. While it is possible to waive the annual fees, evaluate if the benefits of the card is worth paying for, especially if you will not be using your card frequently.
What is The Difference between Visa, Mastercard, and Amex?
Have you ever wondered if there is any difference between a Visa, Mastercard, and American Express (Amex) card? These three companies are network payment processors that manages credit card transactions.
An important factor to consider when choosing between payment networks is the acceptance rate of the card. You would want to avoid a situation where the merchants you frequent do not accept the payment network system of your card! Both Visa and Mastercard are widely accepted. They also offer contactless payment systems that is also widely accepted in Singapore. While Amex are implemented in most large retailers, they are relatively less widely accepted compared to Visa and Mastercard.
However, when it comes to card benefits, Amex is often known for offering the best deals amongst the three companies. This is especially so if you qualify tier cards.
How to Apply for A Credit Card?
Here is a step-by-step guide on how to apply for your credit card
- You can apply for your credit card either through your chosen bank’s website or in person at their nearest branch.
- Ready supporting documents. Different banks may require different sets of documents. Typically, you will need to prepare the following documents: NRIC, Proof of Income/Computerised Payslips, Letter of Employment, CPF Statements etc.
- Complete application form, and submit application form together with supporting documents.
- Await confirmation and processing of your application. Once your credit card application is confirmed and approved, you will receive a letter enclosed with your new credit card. Activate your credit card through SMS, phone call, your bank’s mobile app, or at the ATM.
Other Related Credit Card Guides
Still have questions about credit cards? Apart from user reviews on the plethora of credit cards offered, check out these ultimate guides about all things credit card! No matter your spending habits, these guides are an excellent segue into the world of credit cards.
- Here’s Why You Should Own at Least 1 Credit Card in Singapore
- Introduction to Cashback Credit Cards: What You Need to Know And Which is Best?
- Best Cashback Credit Card 2022
- Best Cashback Credit Cards in Singapore With No Minimum Spend
- How to Get Credit Card Rewards for Paying Your Insurance, Mortage, Taxes, And More
- Best Cashback Credit Cards in Singapore With No Minimum Spend
- Guide to Visa Credit Card Surcharge Fee
- Ultimate AMEX Credit Card Comparison: Which Should You Own And Hacks to Maximise Rewards
- Best Credit Card for Students
- The Ultimate Cheatsheet: Best Credit Cards for Working Adults
- Best Grocery Credit Cards in Singapore
- Best Credit Cards for MRT/Bus Rides
Frequently Asked Questions
What is the best credit card in Singapore?
There is no such thing as a best credit card in Singapore. However, it is more likely that there is a best credit for a specific individual - this is due in part to the varying spending habits and needs of a person looking to apply for a credit card. So be sure to do your due diligence and research before applying for a credit card.
How do I apply for a credit card?
For Singaporeans in order to apply for a credit card, you will have to of age 21 years old (18 years old for student card applications). Additionally, you will have to meet a minimum annual income requirement of S$30,000 (S$40,000 for foreigner) or possess total net personal assets worth at least S$2 million or total net financial assets worth S$1 million. The application of the card can be done either online via the card issuer's website or on-site.
What's the difference between debit cards and credit cards?
When you make make a transaction or a purchase with a debit card, the funds required to complete the transaction comes from your savings or checking account. For credit cards however, the amount is charged to your credit issuer (in most cases, a bank) and it becomes your balance of which payment will have to be made at a later time - including interests.
How to pick the best credit card for you?
To pick the best credit card for you, you need to first determine what you need a credit card for. It could be for a number of reasons which might include, bill payments, online shopping, holiday spending or to manage your cash flow. Based on what you've determined are the reasons, you can then start researching on cards that provide the most benefits and perks that match your spending habits. Be sure to be pay extra attention to the fine details such as the annual fee and also on any minimum spend required in order to unlock the various perks and benefits of a card.
Does cancelling credit card affect credit score?
A credit card can be cancelled without affecting credit score, however ensure that all credit card balances are paid first.
How many credit card should you have?
The number of credit card a person should hold differs. It should depend on an individual's ability to manage their finances and also their spending habits. There are plenty of factors to look at such as annual fees, billing cycles, minimum spend for activating perks or benefits, interest rates and many more. Sometimes having too many credit cards means some credit cards get underutilized while still having to pay for the annual fees. Failing to properly manage credit card billing and payments might end up with a person's credit score being affected.
What are the disadvantages of using a credit card?
There are disadvantages of using credit cards because unlike a debit card, you are essentially owing money to the card issuer every time you make a transaction. If credit cards are not managed properly, you might end up overlooking important things such as billing cycles, interest charges, annual fees and you might end up further in debt. Also, it is easy to overspend with credit cards causing you to end up accumulating a credit card balance that you are unable to pay off completely and you will be charged with high interests causing further problems for you in settling the credit card balance.
How do I increase my credit card limit?
There are a few ways for you to increase your credit card limit. Regular use of your card and paying the balance on time is a good way and easy to increase your credit card limit. You can also increase your credit limit temporarily by applying for a temporary increase in credit limit. You can also apply for a credit limit increase by proving to the issuer that you have increase in income. Failing that, if you are eligible, you can just apply for a credit card with a higher limit.
What is the minimum salary for credit card?
In Singapore, most credit card application requires a minimum annual income of a t least S$30,000.
Is only paying the minimum credit card balance bad?
The problem with paying only the minimum amount for your credit card bills means you will stay in debt longer and your interest will keep building up.
Seedly's Product Comparison Page Listing Guidelines
For Credit Cards products to be listed on Seedly's Product Comparison Page, they have to fulfil the following criteria:
- Monetary Authority Singapore (MAS) Licensed Bank
- Offers either cashback, miles or reward points for online or offline payments