How Do Credit Cards Work?

As its name suggests, a credit card essentially enables you to borrow money, or credit, to make purchases up to a certain credit limit. You will have to pay back this borrowed amount of money later at interest unless you pay off the balance in full each month. To get your credit card, you simply have to apply for your chosen card with the bank provider, get approved and wait to receive a physical copy of your credit card. You can use your credit card to make purchases or withdraw cash. Additionally, using a credit card can also help you build your credit history. Be sure to use your credit card responsibly to prevent affecting your credit score and history.

If you are new to credit cards, here’s everything else you need to know, including what you need to take note of and everything else in between:

• Find Out Why Your Credit Card Declined

• Debit Cards Vs Credit Cards: Find Out The Difference

• Find Out When You Should Upgrade Your Debit Card To A Credit Card

• Guide On How To Get Annual Fee Waiver For Your Credit Cars

• How To Cancel Credit Cards?

• Find Out Which Is Better: Cashback vs Miles vs Rewards Credit Cards

• Find Out How Many Credit Cards Is Too Many

• Find Out How Many Credit Cards Should You Own

• What To Do If You Can't Pay Your Credit Card Bill?

• How To Pay Off Your Credit Card Debts?

• How To Do A Credit Card Chargeback To Reverse Unauthorised Transactions?

• Can You Get A Credit Card With Low Or No Income?

• Credit Card Interest Rates: How To Calculate Credit Card Annual Percentage Rate (APR)?

• What Are The Credit Card Benefits You Didn't Know You Had?

• What Are The Legal Loan Limits In Singapore

• Find Out More About Virtual Credit Cards

Find Your Best Credit Card Fit: Types of Credit Cards in Singapore

There is a wide range of credit cards in Singapore, each offering different rewards and benefits. Generally, the three main types of credit cards in Singapore include cashback, rewards, and miles credit cards.

Air Miles Credit Cards

If you travel frequently or are hoping to maximise your savings on travel-related spending, a miles credit card is perfect for you. A miles credit card rewards you with miles or points for your spending which can be redeemed for your travel-related expenses. Some miles credit cards also offer other travel-related benefits such as travel insurance and airport lounge access. When comparing between miles cards, consider the features like the miles rate, fees, and redemption options that best suit your lifestyle.

Best Miles Credit Card

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• Best 6 Miles Credit Card For Earning Krisflyer Miles

• Find All the Credit Cards for Overseas & Travel Spending

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• Best Miles Credit Card For Earning Krisflyer Miles

• The Best Credit Cards With Free Airport Lounge Access

Cashback Credit Cards

Cashback credit cards are ideal if you frequently use your credit card to make purchases and want to be rewarded in the form of cash. Cashback credit card rewards you with a percentage of the money you spend, at varying cashback rates for different spending categories. These cards also often come with cashback caps and minimum spending. To maximise your savings on a cashback credit card, it is important that you consider the cashback rate, minimum spend criteria, and cashback caps to ensure you choose a card that matches your spending habits.

Best Cashback Credit Card

• Find All the Cashback Credit Cards in Singapore

• Best Cashback Credit Cards In Singapore

Reward Credit Cards

If you prefer to receive bonus points that can be redeemed for tangible gifts and benefits, rewards credit cards would be suitable for you. Rewards credit cards offer you bonus points for your spending that can be redeemed for perks and gifts such as exclusive discounts, events, cash rebates, extra miles etc. When choosing your ideal rewards credit card, consider card features such as their fees, rewards programme, rewards catalogs or redemption options so you can find the best rewards credit card for your unique needs.

Best Rewards Credit Cards

• Find All the Rewards Credit Cards in Singapore

• What are the Best Rewards Credit Card In Singapore?

Best Credit Card for Shopping and Grocery Shopping

• Find All the Credit Cards for Grocery Shopping

• Find All the Credit Cards for Retail Shopping

• Best Credit Cards For Saving On Groceries

• Find Out More About the Best Credit Cards For Women

Best Credit Card for Bills and Loan Payments

• Pay Your Bills And Utilities With These Credit Cards

• The Best Credit Cards For Paying Your Electricity Bills

• Find The Best Credit Card For Your Education Expenses

• Read More About The Best Credit Cards For Big Purchases

• Find Out More About The Best Credit Cards For Online Subscriptions

• Best Credit Card For Wedding Expenses

• Learn More About The Best Credit Cards For Paying Medical Bills

• The Best Credit Card For Paying for Your Grab Rides

Find the Best Credit Card for All Other Needs

• Find The Best Credit Cards For Students In Singapore

• Learn More About The Best Credit Cards For Young Adults In Singapore

• Find Out If You're Eligible For The Most Exclusive Credit Cards In Singapore And Its Features & Benefits

• Read More About The Best Credit Cards For Low-Income Earners

• Find Out More About The Best Credit Card For High-Income Earners

• Find The Best Credit Cards And Digital Cards With Instant Approval

• Beat Inflation With The Best Credit Cards To Help With Rising Costs

• Find The Best Supplementary Credit Cards

• Read More About Credit Cards With Lifetime Annual Fee Waiver

• The Best Credit Card For Foreigners

• Look For The Best Credit Card For Couples

Which Is The Best Credit Card in Singapore: Tips and Factors to Consider

With the huge array of credit cards offered in Singapore, it can be overwhelming to choose the best credit card to suit your needs and personal spending habits. While there isn't just one best credit card in Singapore, there are a few guidelines to help you nail down the best one.

Know Your Spending Habits

Your spending habits can have a significant role in helping you decide on the type of credit card to choose. A good way to start your card search is to identify what you spend the most money on. For instance, if you frequently spend on groceries and food, a credit card that offers high cashback and rewards for general spending and grocery purchases will be ideal for you. On the other hand, if you are a frequent traveler or a wanting to rack up miles to save on your holidays and travel-related expenses, a card designed to reward you will miles on your purchases will help you reach your goals. Identifying your spending habits, needs, and lifestyle is therefore essential in selecting a credit card to help you take advantage of the perks that it offers.

Compare Credit Card Rewards And Benefits

After identifying your spending habits, consider how you want to be rewarded for your purchases. Credit card rewards come in various forms, but mainly, miles, cashback, and points. Consider your lifestyle preference and personal goals to gauge which credit card reward would make the most sense to you.

Reading reviews on credit cards is a straightforward way to compare the rewards and benefits programme between cards. Read reviews on credit cards here and find out which card suits you best: 

• Read The Instarem Amaze Card Review

• Read The Standard Chartered Smart Credit Card Review

• Read The OCBC Frank Credit Card Review

• Read The Standard Chartered Unlimited Cashback Card Review

• Read The Krisflyer UOB Credit Card Review

• Read The UOB PRVI Miles Credit Card Review

• Read The OCBC 365 Credit Card Review

• Compare GrabPay Mastercard vs Credit Cards & Debit Cards

• Compare UOB Absolute Credit Card vs Citi Cashback Plus Credit Card vs Standard Chartered Unlimited Credit Card

• Compare DBS Altitude Credit Card vs Citi PremierMiles Credit Card vs OCBC 90N Credit Card

• Compare POSB Everyday Credit Card vs Citi Cash Back Credit Card vs OCBC 365 Credit Card

• Compare DBS Live Fresh Credit Card vs UOB EVOL Credit Card vs OCBC Frank Credit Card

• Compare UOB One Credit Card vs HSBC Visa Signature Credit Card vs Citi Cash Back Credit Card

• Compare Citi Rewards Credit Cards vs OCBC Titanium Credit Card vs HSBC Revolution Credit Card

• Compare Amex True Cashback Credit Card vs Citi Cash Back Plus Credit Card vs Standard Chartered Unlimited Cashback Credit Card

• Compare Mastercard vs Visa vs American Express Credit Cards

• Compare Metal Credit Cards vs Plastic Credit Cards

Find Out All Credit Card Fees

Knowing and checking the terms and conditions of a credit card is crucial but often overlooked. Before applying for a credit card, read and understand the terms and conditions such as the fees, interest rates, credit limit, and many more.

Check Terms & Conditions

Now that you have identified your spending habits and have a better idea of which reward type would best suit your goals and personal preference, credit card fees are another critical factor to consider in your search for your best card. As a rule of thumb, always look for a card with low or no fees that fit your budget.

Take Advantage of Credit Card Promotions and Deals

Credit card promotions and sign-up bonuses can help you to save additional money and earn rewards. Be sure to read the fine print of these credit card promotions to enjoy the full benefits of these attractive deals. Find the best credit card promotions and sign-up bonuses here:

• Find The Best Standard Chartered Credit Card Promotions

• Find The Best Citibank Credit Card Promotions

• Find The Best OCBC Credit Card Promotions

• Find The Best DBS Credit Card Deals

• Find The Best Red Mart Credit Card Promotions

• Find The Best Lazada Credit Card Promotions

Understanding Credit Card Fees and How to Avoid Them

Credit card fees are charges associated with using a credit card. While we often only hear about annual fees, they are not the only fees banks charge for using a credit card. Here are the other credit card fees you need to know about.

Annual Fees

The credit card annual fee is the most commonly talked about the charge when considering which credit card to get. An annual fee is a fee that some credit card companies charge you for using their credit card. Ranging from $0 to hundreds of dollars, it is usually charged to you once a year. Some companies, however, may allow you to waive the credit card annual fee.

Late Payment Fees

A late payment fee is a fee charged to you when you do not make your minimum credit card payment by the stipulated due date. For context, this fee is imposed to encourage users to make timely payments and to compensate the credit card issuer for the costs and risks that come with managing delinquent users. The late payment fee varies depending on the credit card issuer but is typically around $25 to $40.

Overlimit Fees

You will be charged an over-limit fee if you exceed your credit limit per billing cycle. Depending on the credit card issuer, this fee is usually about $40.

Foreign Transaction Fees

When you make a transaction overseas, your credit card issuer will charge you a percentage of the transacted amount. This fee is known as the foreign transaction fee and is typically around 3% of your purchase. Some credit cards offer no transaction fees which is important if you travel often and frequently make international purchases to help you avoid unnecessary costs and save more on your purchases.

Cash Advance Fees

This is a fee imposed on your if you use your credit card to withdraw cash from an ATM. A cash advance fee is typically charged as a percentage of the cash borrowed, from about 2% to 5%. Do note that some credit cards may also have a minimum cash advance fee, which means that you will be charged a fee if you withdraw an amount that is below this stipulated minimum.

Balance Transfer Fees

You may be charged a balance transfer fee when you transfer the balance you have on one credit card to another. This fee may be charged as a percentage of the balance you transfer or at a flat rate, depending on your credit card issuer.

Credit Card Minimum Payment: What You Need to Know

This is another important term to familiarise yourself with before committing to a new card. As its name suggests, a credit card minimum payment is the smallest amount of money you are required to pay back each billing cycle to avoid any late fees and penalties and keep your account in good credit standing. This fee is charged at about 1-3% of the total amount due, or at a fixed rate, whichever is greater. Be aware that credit card issuers charge high interest on unpaid balances. While you avoid any unnecessary penalties by paying just the minimum, you may end up paying much more in terms of interest since it could take you a long time to pay off your full balance each month.

Are There Consequences to Missing a Credit Card Minimum Payment?

There are several negative consequences if you miss a credit card minimum payment. As mentioned, a late fee may be imposed when you do not pay the minimum stipulated amount each billing cycle. This penalty will cost you an additional $25 to $40 or more. Unfortunately, credit card companies may also increase your interest rates if you miss a minimum payment. Over time, this can make it more difficult to pay off your remaining balance which can lead to higher interest incurred. In extreme cases where you are unable to pay foot your credit card bills, legal action may be taken against you to recover all the unpaid balances.

Does Paying on the Credit Card Minimum Payment Affect My Credit Score?

Yes, making only the minimum payment can have a negative impact on your credit score, especially if you carry a high balance or have high credit utilisation. Credit utilisation is an important factor in the consideration of your credit score since it takes into account the amount of credit you are taking up compared to your credit limit. As such, high credit utilisation indicates to credit card companies that you are a high-risk borrower. Nonetheless, even if you do not fit the above description, it is always recommended to take up credit that you can comfortably repay or repay your credit in full each month. Not only does this reduce the burden of debt and unnecessary interest charges, but doing so may also improve your credit score over time.

Understanding Your Credit Card Limit in Singapore

The credit limit on your credit card is the maximum amount of the bank is willing to extend to you as a credit card user. It is the total amount of money that you can borrow or charge to your credit card without incurring penalties and fees. While regulated and governed by the Monetary Authority of Singapore, your credit limit will be reviewed and adjusted periodically based on your payment history and creditworthiness.

How Is Credit Card Limit Determined in Singapore?

The credit limit is determined by various factors in Singapore although it is governed by the Monetary Authority of Singapore (MAS). Banks issuing credit cards have to comply with these guidelines. Some of the common factors used in determining your credit limit are:

• Age: Younger borrowers may typically have less credit history and may not have had the opportunity to build a strong credit score. On the other hand, may have a longer credit history and higher assessable income, which can increase their creditworthiness and hence credit limit

• Credit score: Your credit score is indicative of your creditworthiness. Banks may hence use your credit score to determine your creditworthiness and calculate your credit limit. Typically, a higher credit score will entitle you to a higher credit limit

• Income: Your level of income suggests a higher creditworthiness since you are more likely able to repay the money borrowed. Hence, the higher credit limit is usually offered to those with higher income

• Debt-to-income ratio: This ratio compares your monthly debt payments to your monthly income. Those with a lower debt-to-income ratio usually have a higher credit limit as it indicates the ability to better manage debts and not default on their payments

Can I Request a Credit Limit Increase in Singapore?

Yes, you can increase your credit card limit. To increase your credit limit in Singapore, you can attempt to do the following:

• Request for a credit review: To demonstrate your creditworthiness for a higher credit limit, you will need to provide documentation such as income, credit-related information through Credit Bureau Singapore, payslips, CPF statements etc. Essentially, you are will need to provide proof of an increase in income or financial resources that you are a responsible borrower

• Temporary credit limit increase: Contact your bank to request a temporary increase in your credit limit if you require additional funds for travel, a wedding, hospitalisation, or compassionate purposes. Be sure to still make timely payment on the temporary limit amount used on or before the expiration date to avoid an over-limit fee charge

Comparing Visa vs Mastercard vs Amex: What Are The Differences?

Deciphering the differences between Visa, Mastercard, and American Express (Amex) may be a challenge even for seasoned credit card users. As the top three popular payment networks in the world, each has its own unique features and benefits to suit different types of users. Hence, choosing your preferred payment network could also be an important consideration for some when selecting credit cards.

Acceptance Rate

Visa, Mastercard, and Amex are all considered widely accepted payment networks in Singapore, with most merchants accepting these cards for payment. In general, Visa and Mastercard are known to be more widely accepted in Singapore than Amex, because of their larger network of merchants and how commonly they are used globally. As such, smaller merchants may not accept Amex credit cards or may require a minimum spend before allowing for Amex transactions.

Rewards & Benefits

Each of them offers unique rewards and benefits suitable for every type of card user depending on personal preferences and spending habits. With a wider acceptance globally, Visa and Mastercard offer a greater range of credit card options, each with various types of credit card rewards to meet the needs of their users -- cash back, miles, points rewards programmes that can be used to redeem travel-related perks, discounts, or cash. On the other hand, Amex is often known for offering premium credit cards with more exclusive and attractive benefits such as concierge services, travel credits, and access to airport lounges. However, such benefits could also come with more stringent credit card eligibility or higher minimum spending per month.

Customer Service

When it comes to customer service, Amex is also often known for providing a high level of support to their customers, with dedicated support for their cardholders. That is not to say that Visa and Mastercard do not offer good quality customer service, but they may not be as personalised as Amex.