Newcomers can avoid wasting time and money by learning how these money matters work differently in Singapore.
If you’re an expatriate in Singapore, then there’s good and bad news when it comes to financial services.
On the upside, Singapore is a financial hub, and you can almost always find what you need. On the other hand, the way things work can be a little different and confusing. Here are the things you need to know:
1. Your Credit Score Doesn’t Transfer Over
In Singapore, credit scores are maintained by the Credit Bureau of Singapore (CBS). If you’re an expatriate who has never used loan services here, your credit score will probably be a Cx (insufficient data), regardless of what it was back home.
If you want to build a solid credit score, the best way is to take a small loan of at least S$1,000, and reliably repay it. This will open the door to bigger credit facilities later.
2. Outright Rejection is More Common Than a Higher Interest Rate
If you manage to develop bad credit in Singapore, you’ll have an issue getting loans in future. Unlike some other countries however, you won’t just get a higher interest rate to reflect your risk profile.
Rather, your loan will simply be rejected, if you have poor credit. You’ll need to re-apply for a smaller loan, or apply elsewhere.
3. There’s No Such Thing as Perpetual Fixed Rates in Home Mortgages
If you’re buying a house in Singapore, you’ll have to bear with a floating rate. Mortgage rates are typically pegged to the Singapore Interbank Offered Rate (SIBOR), or to banks’ fixed deposit rates.
Typically, your mortgage rate will change every month, or every quarter (perhaps less frequently if pegged to fixed deposit rates).
While there are fixed rate mortgages in Singapore, they are always of a limited duration; this is typically three to five years. After that, they will revert back to a floating rate.
4. Your Bank May Not be Able to Block or Reverse Credit Card Transactions
Some banks do not, or cannot, block or reverse credit card transactions. Speak to the bank for more details, when applying for the card.
Nonetheless, do note that - under guidelines from the Associated Banks of Singapore - your maximum liability for credit card theft (without the loss of the physical card) is just S$100.
5. Some Cashless Transactions Actually Cost More
When using a cab, paying by credit card imposes a 10 per cent surcharge. However, booking a cab via an app, such as Uber and Grab (local taxis as well as private hire cars may respond) will not incur this surcharge, even if you pay with a credit card.
Locals are also at a loss to explain this.
Suffice it to say that, if you want to pay for your ride by cashless means, use an app. Don’t actually swipe your card in the taxi.
6. Many ATMs Won’t Dispense Bills Below S$50, and Some Banks Have Fewer ATMs
Some ATMs can dispense S$10 bills, whilst many won’t dispense less than S$50. This can be problematic at times, so hold on to a bit of small change when you get it.
One particular bank, POSB/DBS (both are basically interchangeable, due to a merger), has more ATMs than any other bank. However, some foreign banks have much fewer ATMs, and you may end up walking quite a distance to make a withdrawal.
In an effort to alleviate this problem, some banks share their ATM networks, which widens the pool of available ATMs for use.
In any case, do remember to check the availability of ATMs before you choose a bank, especially if you like to make frequent withdrawals.
7. There is no Capital Gains Tax, But You Can be Taxed on Your Stock Options
There’s no capital gains tax in Singapore, so it’s a good place to trade stocks. However, the tax rules are a little different if you have stock options.
If you have stock options and exercise them, the government considers this part of your taxable income. Do speak to a tax agent for more details, if this concerns you.
8. Singapore’s Pawn Shops Deal with Jewelery and Watches
Forget about bringing your grandpa’s antiques, or your prized guitar, to a pawn shop for cash. Singapore’s pawn shops generally aren’t interested, unless it’s an investible timepiece (expensive watch), or involves gold, silver, or precious stones.
That’s not to say there aren’t thrift, junk, and antique stores that may be interested. Just don’t expect the pawns shops to be.
9. Singapore’s Central Bank Doesn’t Really Set the Interest Rate or Control the Currency Value
Singapore’s central bank manages its currency quite differently, from almost anywhere else in the world.
The currency value is pegged to a basket of 12 different, and secret, currencies - each weighted based its trade importance to Singapore. Unlike most central banks, Singapore takes a non-interventionist approach that lets the free market do its work.
This generally means that interest rate, and currency value, aren’t tightly controlled by the government at all.