From the news: debit cards are making a return to glory days, as consumers deal with debt. Can you still use credit cards to your advantage?
With COVID-19 dragging on for as long as it has, it is no surprise that more and more consumers in Singapore are, according to this article, “increasingly opting for debit cards as the pandemic has made them more wary of chalking up credit card debt”.
Although debit cards are certainly handy for helping you keep within a fixed budget since you can only spend the money you have, there are ways you can milk the most out of your credit cards while still staying within budget. Need more convincing? Take a look at the tried and tested tips we’ve gathered below for a start.
How to use credit cards the savvy way
#1 Set a low credit limit
While it is common knowledge that banks are happy to grant temporary or permanent credit limit increases for their customers (based on a case-by-case basis), many people aren’t aware that they can request to set lower credit limits for their credit cards.
It’s very straightforward: a lower credit limit will limit your spending power. Setting a lower credit limit is a simple hack to ensure that you won’t spend beyond your means.
For example, if you tend to spend approximately S$600 across groceries, dining, and transport, you might want to consider matching your credit limit to the average amount you spend monthly.
How to reduce your credit limit:
1. Contact your card issuing bank online, over the phone or in-branch
2. Request for credit limit decrease
3. Your credit limit should be updated within 24 to 48 hours
#2 Use credit cards only for essentials
To avoid overspending and chalking up unnecessary debts on your wants, reserve your credit cards only for essentials like groceries, petrol, dining, food deliveries, and Grab/Gojek rides no matter how tempting or convenient it may be to swipe your credit card at every opportunity. Some credit cards are great for paying bills and insurance premiums, too.
#3 Double-dip rewards
Did you know you can earn rewards on the things you already spend on through platforms like Shopback, Kris+ and Fave? This is the magic of double-dipping. You earn rewards on your credit card spending as usual, plus snag extra rewards by clicking through these platforms online or through mobile apps. Say hello to more cashback and miles!
With the massive rise in BNPL’s popularity in Singapore, you can be sure that major BNPL players dangle promotions frequently to attract more customers despite the fact that BNPL users can already earn credit card rewards on their BNPL instalments. New to the world of BNPL? Here are handy BNPL tips your wallet will thank you for.
#4 GIRO your bills
Setting up automatic bill payment is the number one thing you can do to avoid missing credit card bill payments, racking up late payment fees and hefty interest charges.
While you have to ensure your bank account has sufficient funds to begin with, you will never have to deal with missed or late payments when you GIRO your credit card bills, phone bills, utility bills, electricity bills and more. It’s high time you bid goodbye to the arduous task of tracking all your bills’ due dates on a regular basis.
Credit cards are a great tool if you use them right
Credit cards can be rewarding if you make an effort to use them wisely to your advantage. This means watching your expenses, not rolling over balances and being disciplined altogether.
Not only do you get to earn cashback, miles or rewards points — depending on the type of card you pick — you can also take advantage of the many dining and lifestyle promotions that banks throw in for their customers.
Additionally, certain credit cards can play a role in helping you earn higher interest on your savings parked in high-interest savings accounts like the DBS Multiplier or UOB One.
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