5 Credit Card Mistakes Singapore University Students Make, and How to Avoid Them

University life is a whirlwind of new experiences, and let's be real, some of the most important lessons you'll learn won't come from a textbook. We're talking about the real-life stuff – like figuring out that a diet of instant noodles isn't sustainable, tackling that mountain of laundry that seems to multiply overnight, and discovering that pulling an all-nighter before an exam isn't the magic formula for straight As.

One crucial set of skills often missing from the university curriculum? Financial management. No professor is going to grade you on how well you handle your first credit card. This is where many of us learn the hard way, through trial and error, often with some pretty costly consequences.

But don't worry, we've got your back! At SingSaver, we're all about helping you make smart financial decisions. By going into the world of credit cards with your eyes wide open, you can avoid the common and difficult money mistakes that many young adults in Singapore grapple with well into their 20s. This article will highlight five key credit card mistakes that Singapore college students commonly make and provide practical advice on how to avoid them.

>>MORE: Best student credit cards in Singapore

1. Falling for the "too many cards" trap

Credit card companies know how to tempt university students with shiny perks – cashback, discounts on dining, shopping, and travel. Promotional campaigns from major banks, like DBS, UOB, and OCBC, are specifically designed to catch your eye and entice you to get caught up in the promise of instant rewards and that feeling of financial freedom.

But here's the thing: even though financial institutions in Singapore are subjected to Monetary Authority Singapore (MAS) guidelines, it doesn’t mean it is a good idea to apply for every card you see! Having too many credit cards can quickly lead to poor financial habits. It becomes a juggling act trying to track balances, due dates, and spending across different cards. This can easily lead to missed payments, late fees, and a snowballing debt situation. Plus, those multiple cards often come with multiple annual fees, which can really add up!

When you're just starting out, the best approach is to begin with one credit card that truly suits your needs. Focus on building those responsible financial habits first, before you even think about adding more complexity. This allows you to practice managing your spending, paying those bills on time, and staying out of debt – all without the stress of juggling a whole bunch of accounts.

Remember that mantra of just saying “no” you learned back in school? It applies here too. Resist the urge to sign up for every credit card offer that comes your way. Focus on building a solid financial foundation with that one card first. Trust us, it's a smart credit card mistake to avoid.

>>MORE: 3 Valuable tips for first-time credit card owners

2. Losing track of your spending

Singapore is a true cashless society. With the widespread adoption of PayNow and contactless cards, spending has become incredibly convenient. A simple tap or scan, and you've made a purchase. While this ease of transaction is definitely a benefit, it can also lead to a dangerous lack of awareness about your spending habits.

Unchecked expenses can quickly accumulate, leading to high-interest debt that can be tough to manage, especially when you're on a student budget. This is a common student credit card problem we see all the time.

So, how do you combat this? You've got to implement a system to track your spending. This could be as simple as using a spreadsheet, a budgeting app on your phone, or even an old-school notebook. Many banks in Singapore offer excellent budgeting tools to help you out.

For example, the DBS NAV Planner is a super powerful tool that helps you track your spending, set budgets, and visualise your finances. We highly recommend utilising tools like these to stay on top of your expenses and avoid overspending. It's important to know what not to do with a credit card, and ignoring where your money is going is a big no-no.

3. Letting those bills slip your mind

University life in Singapore is demanding, right? You're juggling packed schedules with classes, internships, social activities, and maybe even a part-time job. In the midst of all this hustle and bustle, it's easy to overlook some important details, and unfortunately, credit card bills can be one of them.

But listen up: missing those credit card payments can have some serious consequences. Late payments not only incur frustrating late fees and interest charges, but they also damage your credit score. Singapore's Credit Bureau (Singapore) tracks your payment history, and a negative record can significantly affect your future loan approvals – think housing loans, car loans, and more.

So, how do you make sure you don't forget? 

Most banks in Singapore allow you to set up automatic bill payments, and it's a lifesaver! You can schedule payments in advance so you never miss a due date. You can also set reminders on your banking app or your phone's calendar to alert you of those upcoming due dates.

These simple preventive measures will ensure your bills are paid on time, protecting that credit score you're building and avoiding those unnecessary charges.

4. Falling into the "I'll pay for it later" trap

Many students fall into the trap of assuming they can easily pay off credit card debt once they graduate and start working. You envision a future where you're earning a good salary and can quickly settle your dues. But, as you'll soon find out, financial commitments post-graduation can make things more challenging than you anticipate.

Entry-level salaries in Singapore, while they're definitely improving, may not be as high as you expect right away.

Furthermore, as a new graduate, you'll likely face a range of financial obligations, including student loans, CPF contributions, rent, and daily living expenses. These competing priorities can make it difficult to dedicate a large portion of your income to credit card repayment.

The high cost of living in Singapore, particularly for housing and food, further exacerbates this issue. It's tempting to use "buy now, pay later" (BNPL) schemes like Atome and GrabPay to afford necessities or those items you've been eyeing, making it even easier to defer those payments.

While BNPL can be a useful tool for managing your cash flow, it's crucial to use it responsibly. Relying too heavily on BNPL and credit cards without a solid repayment plan can lead to a debt cycle that's really hard to break.

The most responsible approach is to only charge what you can realistically afford to pay in full each month. This prevents the accumulation of high-interest debt and allows you to build a positive credit history, which is essential.

5. Shying away from credit cards altogether

While the potential pitfalls of credit card use might tempt some students to avoid them entirely, this approach can actually be detrimental in the long run. Building a credit history is essential in Singapore, and responsible credit card use is a key factor in establishing it.

Think of it this way: your credit history is a record of your borrowing and repayment behaviour. Lenders use it to assess your creditworthiness when you apply for loans, mortgages or even when you're looking to rent a place. In Singapore, the Credit Bureau plays a vital role in collecting and reporting your credit information.

Credit scores are calculated based on various factors, including your payment history, credit utilisation (how much of your available credit you're using), and the length of your credit history.

So, avoiding credit cards completely means you're missing out on a valuable opportunity to build that positive credit history. This can definitely hinder your future financial goals.

Don't let those fears hold you back! Start building your credit history by getting a student credit card and using it responsibly. Begin with small, manageable purchases, like your groceries or transportation costs, and always pay off the balance on time every single month. This demonstrates responsible credit management and contributes to a positive credit score.

The bottom line: Don't let credit card mistakes derail your financial future! Arm yourself with knowledge and start building those good habits now.