Should I Use My Credit Card to Pay for Everything?

Alevin K Chan

Alevin K Chan

Last updated 21 April, 2022

You can use your credit card to pay for virtually everything in Singapore. Here’s why you should, and how you can do so safely. 

There’s no doubt that credit cards offer a safe and convenient way to pay for the things we want and need

They can also provide rewards and perks that help us save money and unlock some extra value out of the dollars we spend. 

Additionally, credit card use can also help you build up your credit score, which is helpful when applying for a mortgage or other financial tools.

Clearly, the more you use credit cards, the more you can enjoy their benefits

On the flip side, credit cards can also spell trouble. The easy availability of credit tempts you to spend, while the option to keep rolling over your balance can make it easy to fall into a debt trap

So which is it? Should you use credit cards as much as you can? Or should you curb their use in the name of financial prudence?

Paying with credit cards - pros and cons

ProsCons
Convenient and speedy paymentCan be easy to overspend
Provides variety of rewards and benefits that stretch your dollars furtherCan create a debt trap
Regular use can help build credit score
Safer to carry and use than cash

Pros of paying with credit cards

Convenient and speedy payment

One unbeatable benefit of paying with a credit card is the sheer convenience and speed with which you can complete your transaction. 

For most instances, you simply have to tap your card on an e-reader, and you’re good to go. 

You never have to worry about having enough money, or about getting the correct change back.

Rewards that stretch your dollar 

Credit cards provide a variety of rewards, perks and benefits that ultimately help you save money and make your dollar stretch that much further. 

Cashback gives you straight-up savings on qualifying transactions, while reward points can be saved up and redeemed for anything from shopping vouchers to exclusive products and even help pay off your bill. 

Meanwhile, air miles can be used to pay for air tickets, flight upgrades, hotel rooms and other holiday perks.

SingSaver Exclusive Offer: Enjoy the following rewards when you sign up for an HSBC credit card.

HSBC Advance Card and HSBC Live+ Card: Receive a Flujo SmarTrax Standing Desk (worth S$739) or a Xiaomi Robot Vacuum S20+ (worth S$449) or an Apple AirPods Pro (Gen 2) With Magsafe Charging Case (worth S$349) or S$330 Lazada Voucher upon activating and spending min. S$500 by end of the following calendar month from the card account opening date and providing marketing consent. Valid till 9 October 2024. T&Cs apply.

HSBC TRAVELONE_SEP_IN BLOG ARTICLE_800x250

HSBC TravelOne Card: Receive an Apple AirPods Pro (Gen 2) With Magsafe Charging Case (worth S$349) or S$330 Lazada Voucher or 15,000 Max Miles upon activating and spending min. S$500 by end of the following calendar month from the card account opening date, paying the annual fee of S$196.20 incl. GST, and providing marketing consent. Offer available for both new and existing customers. Valid till 9 October 2024. T&Cs apply.

Or, fulfil the same requirements and receive a S$50 eCapita Voucher (fulfilled by SingSaver) on top of 20,000 miles (fulfilled by HSBC). Offer available for both new and existing customers. Valid till 9 October 2024. T&Cs apply.

Rewards Upgrade Campaign_BLOGARTICLE_800x250 (1)

⬆️Reward Upgrade Campaign⬆️: Upgrade your rewards when you top up as low as S$200. Valid until 9 October 2024. T&Cs apply.

  • S$200 for a Sony HT-AX7 Portable Theatre System worth (S$769.00)
  • S$588 for a Sony ZV-1M2 Vlog Camera worth (S$1,209.00)

Helps build your credit score

Each time you pay off your credit card bill on time and in full, you’re demonstrating fiscal responsibility and prudence. 

These are traits that banks and lenders look upon favourably, as they indicate how likely you are to repay a loan in a committed and responsible manner. 

Hence, paying with your credit card can also help you build up your credit score. This is important, as a low credit score can result in higher interest charges, or even prevent you from getting large loans such as a mortgage. 

Safer to carry and use than cash

Unless you’re a fugitive on the run, paying with your credit card is almost always preferable to using cash. 

This is because carrying one card around is much easier and more convenient than walking around with a stash of cash. Also, should your credit get stolen or taken, all you have to do is to inform your bank and block your card to keep the funds in your bank account safe. 

On the other hand, cash that is stolen or lost is exceedingly hard to get back. Even if the culprit is caught, they might have already spent the cash they took from you, and there’s no guarantee of compensation.

SingSaver's Exclusive Offer: Receive the following rewards when you sign up for a Citi Credit Card:

🚀Fastest Rewards Fulfilment🚀: Get the cash rewards within four (4) weeks after successful application — the fastest rewards fulfilment yet! T&Cs apply.

*📣For Citi PremierMiles Card: Receive an Apple iPad 9th Gen 10.9 wifi 64GB (worth S$508.30) or a Samsonite Straren Spinner 67/24 + 2X AirTag (worth S$690.80) or 18K Heymax Miles or S$320 FairPrice Vouchers or S$320 Cash via PayNow upon activating and spending a minimum of S$500 within 30 days of card approval. This card offer is exclusively available on SingSaver. Valid until 31 October 2024.  T&Cs apply.

Get an additional S$100 eCapitaVoucher when you simultaneously open a Citi Citigold Account. Valid until 31 October 2024. T&Cs apply.

*📣For Citi Prestige Card: Get a Samsonite Straren Spinner 67/24 + 2X AirTag (worth S$690.80) or 18K Heymax Miles (worth S$300) or S$320 FairPrice Vouchers or S$320 Cash via PayNow upon activating and spending a minimum of S$500 within 30 days of card approval. This card offer is exclusively available on SingSaver. Valid until 31 October 2024. T&Cs apply

*📣ONLY AVAILABLE ON SINGSAVER📣

Other Citi Credit Cards: Receive an Apple iPad 9th Gen 10.9 wifi 64GB (worth S$508.30) or a Hinomi H1 Classic V3 Ergonomic Office Chair (With Headrest) (worth S$659) or an Apple AirPods Pro Gen 2 + Magsafe Charger (worth S$408) or S$320 FairPrice Vouchers or S$320 Cash via PayNow upon activating and spending a minimum of S$500 within 30 days of card approval. Valid until 31 October 2024. T&Cs apply.

For Citi SMRT Card and Citi M1 Platinum Visa Card: Receive an Apple iPad 9th Gen 10.9 wifi 64GB (worth S$508.30) or a Dyson Micro 1.5kg Vacuum (worth S$599) or S$320 FairPrice Vouchers or S$320 Cash via PayNow upon activating and spending (min. S$500 spend) within 30 days of card approval. Valid until 31 October 2024. T&Cs apply.

Rewards Upgrade Campaign_BLOGARTICLE_800x250 (1)

⬆️Reward Upgrade Campaign⬆️: Upgrade your rewards when you top up as low as S$200. Valid until 31 October 2024. T&Cs apply.

  • S$200 for an Apple Watch Series 9 (GPS) 41mm (worth S$604.50)
  • S$800 for an Apple Watch Ultra 2 GPS + Cellular 49mm (worth S$1,210.10)
  • S$980 for a Macbook Air 13" 256GB M3 (worth S$1,599.00)
  • S$1,200 for an Apple iPhone 15 Pro 128GB (worth $1,664.25)
  • S$1,786 for a Samsung Galaxy S24 Ultra Titanium Gray 12+512GB 5G (worth $2,128.00)

Cons of paying with credit cards

Overspending is easy

Paying with credit cards can make it easy to overspend, even if you’re usually careful with your money.  

The speed and convenience with which you can pay for things certainly plays a part here, but there’s an even more insidious reason.

Researchers have found that by removing the presence of physical cash from the payment process, human beings are more willing to spend. This phenomenon is so well-known that it has even earned a name - The Cashless Effect.

Can create a debt trap

Paying with credit cards can cause you to fall into a debt trap if you’re not careful.

Credit cards allow you to roll over your balance, but in exchange, you agree to be charged interest on the outstanding amount. 

This isn’t a problem if the amount is low and/or if you pay off your entire balance shortly - you’ll likely only pay a couple of dollars in interest charges. 

The trouble starts when you incur a large balance that you keep rolling over from month to month, or if you take a long time to pay off your credit card balance.

You see, credit cards charge interest on a compounding basis, which means the amount you owe increases day by day. 

If you only pay off the interest added to your balance for the month, you are only preventing your debt from growing.

If you want to start paying down your credit card balance, you’ll need to pay more than the interest charges for the month. 

Just for illustration consider this scenario. A balance of S$5,000 on a credit card with interest of 27% per annum will incur around S$112.50 in interest each month.

If you are only able to pay S$200 into your credit card balance each month, only S$87.50 goes towards your balance. The remainder - in this case, 56.25% - of your payment goes towards interest charges instead. 

Paying off credit card debt can prove difficult if your credit card balance grows beyond a certain point. You may even find yourself falling into a debt trap from which it is difficult to escape. 

Credit cards are best enjoyed responsibly 

The bottom line? 

Like all the finer things in life you can buy with them, credit cards are best enjoyed responsibly.

Look, if you’re going to spend money anyway, you might as well help yourself to cashback, rewards points and air miles. 

Also, being a cardmember will give you access to exclusive deals from your favourite brands, as well as perks and privileges such as free airport lounge visits and complimentary travel insurance

So given all these advantages, you should use your credit card every opportunity you get. 

However, there is one cardinal rule you should strive to keep: Never carry a balance, and only spend what you can afford to pay off. 

This means that for a large purchase, you should first save up the funds in your bank account, before paying with your credit card and reaping the rewards on your transaction.

Also, credit cards often have credit limits that are higher than your monthly salary. This can make you feel overconfident and encourage overspending. 

To help prevent this, be sure to lower the available limit on your credit card, such that it reflects your actual financial status. You can always request a limit increase when you need to. 

Read these next:

Top Credit Card Promotions And Deals On SingSaver (April 2022)
The Best Credit Cards for Young Adults in Singapore (2022)
The 10 Most Popular Credit Cards Amongst Millennial SingSaver Staff
5 Signs It’s Time To Upgrade Your Debit Card To A Credit Card
Can Cancelling A Credit Card Have Detrimental Effects?

Alevin loves helping people make good money decisions. He briefly flirted with being a Financial Advisor, but quickly realised writing about personal finance is the better way to go.

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