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Credit cards allow you to spend on your purchases today and make payment in the future, when it’s time to settle your monthly bill. If you miss the monthly payment, you will be charged a hefty interest rate of around 25% p.a.
The main draw about credit cards is that they help ease cash flow – you don’t have to suffer an immediate outflow of money as you’re spending ‘future money’. Besides being able to spend before you receive your pay, credit cards also reward you for your spending in the form of cashback, miles or reward points.
You can apply for a credit card online or using physical forms available at banks. Fill up the personal details required, submit the relevant documents (such as your NRIC and payslip or latest CPF statements), and wait for the application to be approved.
Most banks also offer the option of applying via MyInfo using SingPass. Applying via MyInfo speeds up the application process as most of the information required would have been pre-filled in for you. Sometimes, there are promos where you get rewarded cash gifts by applying with MyInfo.
When using a debit card, the money you spend is immediately deducted from the bank account linked to the debit card. You cannot spend more than the amount you currently have in your account.
On the other hand, credit cards allow you to spend on credit. This means that you do not actually make the payment for the purchase until you receive your credit card statement at the end of the statement or calendar month.
There are three main types of credit cards: cashback, miles and rewards cards. The credit card you choose would depend on your spending habits and personal preference. You can read this article to find out which of the three types is best for you.
If you are looking for a credit card for a specific spending type, you can check out these articles to find the best credit cards for:
Visa, Mastercard and American Express are different credit card payment networks. Most credit card providers offer one or two of the card networks for their credit cards. For example, for DBS Altitude, you can get either the DBS Altitude Visa Signature or DBS Altitude American Express. UOB PRVI on the other hand, offers all three options — UOB PRVI Miles Visa UOB PRVI Miles Mastercard and UOB PRVI Miles American Express.
From a cardmember’s standpoint, the payment in general does not differ, although there are a handful of places that might not accept American Express cards. The perks offered by these card providers do make a difference, in terms of dining promotions, airport transfers, lounge access, hotel benefits and more.
The most common fee you’ll incur with a credit card is the annual fee. This annual fee typically falls just under S$200 each year, although it differs from card to card. If you’re not keen on paying this annual fee, you’ll be glad to know that some credit cards come with a free annual fee waiver, while others waive your annual fee when you spend a certain amount each year.
Other credit card fees include:
There is a minimum monthly payment you have to make for your credit card bill. This is the amount you would have to pay in the event you are unable to pay your credit card bill. The minimum monthly payment is typically 3% of the total balance or S$50, whichever is higher. But note that the outstanding balance would incur interest charges that are applicable on a daily basis until the full payment is received.
To avoid credit card fraud, you can set up Two-Factor Authentication (2FA) for all your bank accounts. You should be mindful to keep your passwords, PIN code and One-Time Password (OTP) to yourself. During correspondences with your bank or credit card provider, always check the source of the message or email to ensure it is genuine.
You can also read this article to get tips on how to prevent cyber attacks and safeguard your money.
If you’ve decided on the credit card to apply for, you can check out the promotions available on SingSaver. These promotions are a further incentive for you to sign up for the credit card, with rewards that range from cash via PayNow to free gifts such as wireless earbuds or GrabFood vouchers.
Here’s what you should look out for when signing up for a credit card promotion:
When does the promotion expire? Be sure to sign up for the credit card before the promotion deadline.
Need to know
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Business credit cards, sometimes known as corporate or commercial credit cards, are cards that can be used by an employee or owner of a company to pay for business expenses. They are good for freeing up cash flow by using a line of credit to pay for business expenses.
It usually comes with perks such as rewards programs, additional cardmembers and expense reporting systems. Also, with a business card, the company is liable for the debt and not the individual, unlike a personal credit card.
Business credit cards, unlike personal credit cards, are designed specifically for work expenditure. They may include features such as additional cards for employees, customisable spending limits and expense tracking.
Both credit cards, however, are similar in a few other ways. Both give you access to funds up to a specified limit, and allow you to pay off outstanding balance over time (albeit with interest charges if you fail to make payment on time). They also include annual fees, as well as additional costs such as rewards redemption cost.
As a business owner, a business credit card gives you more control and visibility over your business expenses. It can also help you to manage your company’s travel and entertainment expenses. You can also enjoy other perks such as:
You could also have at your disposal management and reporting tools, as well as insurance coverage for employee misuse.
Rewards business credit cards: Earn cash, miles or points as you spend.
Frequent flyer business credit cards: Earn airline loyalty points for every dollar you spend. You can also use these accumulated points to redeem business flights, upgrades, accommodation, cashback and other perks for yourself and your employees.
Low interest rate business credit cards: Offer flexible financing for business owners.
Corporate business credit cards: These cards are issued to employees to allow them to charge authorised business expenses such as hotel stays and flight tickets.
The qualifying criteria for a business credit card differs from bank to bank. Some of the criteria include:
Having a business card for your small business isn’t compulsory. However, a business credit card offers a range of benefits for small business owners that make running a business easier and more organised — such as higher credit limits, a separate credit amount for your business, tracking expenses and boosting credit rating, among others.
To apply for a business credit card, besides filling in the application form provided, you also should have:
You might also require:
Similar to personal credit cards, business credit cards also charge an annual fee. This annual fee ranges from S$100 to S$300. Some credit cards might waive the annual fees, typically for up to 1 to 2 years. Other charges to take note of include interest rates, currency conversion fees, cash advance fees and late payment fees.