How to Borrow for Free with a Credit Card

Ryan Ong

Ryan Ong

Last updated 16 June, 2015
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Credit cards are the best way to borrow money without having to pay any interest – but only if you do it right.

If you’ve never used a credit card before, you might think it’s a pretty risky move to apply for one. Especially if you have read the recent news about people applying for Repayment Assistance Scheme (RAS) because they’re up to their necks in debt.

But credit cards are not all that risky. They provide convenience, offer rewards and can save you hundreds of dollars every year. All of these at 0%, if you pay off your full monthly outstanding spending before the interest-free period.

Here is a short guide to help you get started with credit cards and saving money.

Get Started with Free-for-Life Credit Cards

New to credit cards? These cards are great for beginners as they’ve waived off the annual fee completely so you don’t have to pay any extra charges.

 Card NameTypeAverage CashbackHighest Cashback
ANZ Switch Platinum Card

Rewards Card1.40%2.31% on Groceries, Petrol and Entertainment
CIMB Visa Signature CardCashback Card1.95%3.8% on Dining and Entertainment, Online spend payWave
CIMB Visa Infinite CardCashback Card2%2% on Overseas and Travel

*Average cashback for rewards card is weighted average of amount of cash each rewards point gives you across categories. Please read our guide on Rewards Credit Card for more details.

How Does a Credit Card Work?

A credit card essentially gives you an interest-free loan for a period ranging from 20 to 24 days, during which you pay no fees for borrowing. It’s perfect for making a purchase when you don’t have cash at the moment.

Credit cards are usually categorised into one of the following categories: air miles credit card, cashback credit card and rewards credit card. The difference between each category is the promotions you get when you spend.

Some of the most common offers you can get are rewards points to exchange for vouchers with merchants, hard cashback to offset on your next credit card bill, and air miles to convert to air tickets and flight upgrades.

The Key to Owning a Credit Card

The Key to Owning a Credit Card

Is it really possible to borrow for free with a credit card? Yes, if you always remember this golden rule: pay off any outstanding balance during the grace period.

Your credit card follows a billing cycle which ranges from 28 days to 31 days depending on your card issuer. During this time, no interest is charged on the sum you’ve borrowed – this is also known as the grace period.

You’ll want to avoid paying after that, because you’ll be charged an interest rate of 24% to 28% per annum (this comes down to about 2% a month). To do so, it’s always important to spend only what you can afford, so you’ll never wind up drowning in debt.

The easiest way to pay off in full each month is to assign a savings or current account for the card issuer to deduct your outstanding balances from. You can opt for this method of payment during the application process.

How to Pick the Right Credit Card?

When you pay your balance during the grace period, you wouldn’t have to worry so much about interest rates.

So, think about what you spend most on and what your priorities are. Do you spend a lot on groceries? Or maybe you travel quite often during the year?

Each credit card has its own benefits. Some are better for cashback rebates, some known for its air miles, and some are great at rewarding you with points. Pick one that suits your needs to get the most out of your credit card and save hundreds of dollars every year.

How to Borrow for Free with a Credit Card

How to Apply for a Credit Card?

In general, most card issuers require you to earn at least S$30,000 a year and be above 21 years old. Card issuers usually double the earning requirements for foreigners (e.g. if a card requires a Singaporean to earn S$30,000, a foreigner might be required to earn S$60,000).

Another important factor that affects your eligibility is your credit rating. A bad credit history reflects badly on your ability to make repayments and can lead to a credit card rejection.

Want another type of credit card? Start comparing with to find the best credit card based on what you need!

Ryan has been writing about finance for the last 10 years. He also has his fingers in a lot of other pies, having written for publications such as Men’s Health, Her World, Esquire, and Yahoo! Finance.


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