5 Things to Know When Graduating From Debit to Credit Cards

Aaron Wong

Aaron Wong

Last updated 11 April, 2019

Credit cards give you greater purchasing power and greater rewards than debit cards. If you’re thinking about graduating from debit to credit cards, here are a few things to know.

Opinions expressed reflect the view of the writer (this is his story).

It’s certainly exciting to make the switch from debit cards to credit cards. I’ll always remember how thrilled I was to get my first credit card back when I started working- finally, I’d start earning miles (or cashback, har har), just like an adult!

Debit Cards vs Credit Cards

Credit card rewards are great, and in general, you’ll find a lot more benefits and discounts are available to credit card holders. Plus, you’ll enjoy lower foreign currency transaction fees and better fraud protection* than with debit cards.

*The ABS caps consumer liability for fraud on credit or debit cards at $100. The key difference, however, is that with debit cards funds are immediately deducted from your account whereas with credit cards they are not. If you are the victim of fraud on a debit card, you may find yourself in a tight cashflow position while the matter is being resolved

At the same time, however, credit cards can seem scary. Some people simply don’t trust themselves to be responsible with that kind of power, others worry about the impact a missed payment will have on their financial record.

If you’re thinking about graduating from debit to credit cards, here are a few things to know.

5 Things to Know When Graduating From Debit to Credit Cards | SingSaver

Image credit: The Straits Times

1. There’s nothing wrong with credit cards

There’s no shortage of horror stories online about people who went too far, too fast with credit cards and ended up in all sorts of trouble. Some of you may even know friends or family heavily in credit card debt.

These incidents are unfortunate, but it’s important to remember that credit cards, in and of themselves, are not a bad thing. They’re just like any other tool you can think of- used irresponsibly, they can be dangerous. Used responsibly, however, they can be a great asset.

When I say great asset, I’m not just thinking of rewards; I’m thinking of building your credit score. Your track record of paying off credit card bills in full and on time provides banks and other lenders with the confidence to grant you loans when the time comes.

This is why credit cards are not something to be avoided based on some misguided belief that “credit is bad”. If you only ever used debit cards and one day need to apply for a housing loan, how would the bank be able to gauge how responsible you are with using credit?

2. Don’t get caught in the debt trap

Despite what the name suggests, credit cards should not be used for credit. That’s to say: it’s a very bad idea not to pay off your bill in full each month. The best practice is to set up a GIRO arrangement as soon as you get your card. That way, you’ll never forget to make a payment.

Most banks charge upwards of 25% APR on unpaid balances, in addition to late fees. You’ll be amazed how fast that can snowball. If you don’t believe you can pay your credit card bill in full, and on time, don’t get a credit card.

If you really need to borrow money, consider a personal loan from a bank. You’ll enjoy much lower interest rates (typically 4-5%) than borrowing on a credit card.

3. Think of credit cards as debit cards with rewards

As per MAS regulations, a credit limit of up to 4 times your monthly income may be granted (6 if you earn at least $120K a year). For someone earning $3K a month, getting $12K of purchasing power may sound like a dream come true, but it isn’t a license to actually spend that much.

Think of credit cards like debit cards, but with rewards. A debit card doesn’t allow you to spend more than you have in the bank, and neither should a credit card. It’s never a good idea to buy something that costs $10K when you have $5K in the bank.

4. Credit card rewards are a way of not leaving money on the table

I love playing the miles game, and collecting miles has enabled me to have some out-of-this-world travel experiences and given me access to business class without having to fork out insane amounts of money. That said, I have never felt compelled to spend more money just for the sake of earning miles, and neither should you.

For me, credit card rewards are a way of not leaving money on the table. If I’m going to spend $300 a month on groceries anyway, I might as well get some miles out of it. However, I’m not going to double my groceries budget to $600 by shopping at gourmet places just for the sake of earning miles.

See what I mean? Miles (or cashback) should not be an inducement to put further money down. It should simply be a way of capturing value that would otherwise have gone to waste by paying with cash/debit cards.

5. Annual fees may look scary, but remember waivers!

Considering the fact that the average debit card has a token annual fee of maybe ~$10, credit cards can look prohibitively expensive in comparison. Most credit cards have annual fees upwards of $190 a year (with the first year usually free), and that stops some people from making the switch.

However, my experience shows that banks are more than willing to waive annual fees so long as you hit certain transaction or spending requirements within a year. Furthermore, annual fees are always charged at the start of the year. This means that if a bank is unwilling to waive your annual fee, there’s nothing stopping you from cancelling the card, getting a refund on the fee and taking your business elsewhere.


Credit cards give you greater purchasing power and greater rewards than debit cards, but with that power comes increased responsibility. If you spend within your means, pay off your bills in time and keep a clean credit history, then credit cards are a great way of earning bonus rewards. If not, perhaps it’s better to get your financial house in order before considering making the switch.

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Ready to graduate from a debit to a credit card? Be sure to compare and apply through SingSaver to get the best deals and exclusive welcome offers – on top of the bank's usual welcome gift!

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Read these next:

Which Are The Best Cards to Earn Miles While Shopping?

5 Ways to Get the Highest Credit Score in Singapore

Air Miles Cards: 8 Questions to Help You Choose the Right Card

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By Aaron Wong

Aaron started The MileLion to help people travel better for less and impress “chiobu”. He was 50% successful. This is his story.

Aaron founded The Milelion to teach people how to travel better for less, with credit cards, airline and hotel loyalty programmes. With 500,000 miles flown and counting, he’s keen to debunk the myth that you can’t travel in style without breaking the bank.


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