Applying for a credit card is an important step. It’s a significant moment that marks your transition to working life. If you are a first-time card applicant, be prepared to adapt your lifestyle.
With a slew of responsibilities that come with owning a credit card, you might doubt you should apply for one, but don’t worry – you’ll be glad to know that owning a credit card comes with plenty of benefits.
We’ve compiled a list of the top five benefits of getting a credit card.
5 Key Benefits of Owning a Credit Card in Singapore
1. Credit cards help build credit history for loan applications
You must be wondering what credit cards have to do with loan applications? Credit cards help increase your credit score by building your credit history.
It is imperative that you have a good credit history. Why is this so?
Before a bank decides to give you a loan, they will assess your creditworthiness. With a good credit history, you have a better chance of getting your loan application approved.
Plus, you’ll probably also get great interest rates. If you want to buy a house and need a mortgage from the bank, a low interest rate will work in your favor.
How do you ensure you have a reliable credit history?
First, pay your credit card bills promptly and in full. Second, do your best to stay below your credit limit.
This reflects your credibility and financial strength. It is indicative of your solvency and your ability to repay your debts.
2. Gives you more access to money
In Singapore, your credit limit depends on your annual income. Your credit limit is capped between two to four times your monthly income. For example, if you earn $5,000 per month, you can spend between $10,000 and $20,000 per month.
Even if you have no money in your bank, you will still have access to funds. In an emergency, this benefit of a credit card comes in handy.
For example, expensive household items like washing machines can suddenly break down. With a credit card, you can always replace your washing machine without having to shell out a large sum of money immediately.
However, we recommend that you spend within your limit and only borrow an amount you can afford, as credit card interest rates are very high. On average, credit cards have an interest rate of 25% in Singapore.
READ ALSO: Your guide to credit card applications in Singapore
3. A Simple Way to Track Your Expenses
Having trouble keeping track of your monthly expenses? Making payments with a credit card is a great way to track your spending, as you’ll get a detailed breakdown of your spending on your credit card statement.
You can also better understand your spending habits and track trends. Additionally, you can also use your credit card statement to track unauthorized purchases or dispute any transaction, which is an added security feature.
4. Get promotions and sign-up bonuses via credit card
Are you still hesitating if you should apply for a credit card? You’ll be happy to know that many banks offer credit card sign-up promotions and bonuses. Incentives usually come in the form of free money or expensive gifts.
Typically, these credit card sign-up promotions have a catch. For example, most offers ask you to spend an amount of money within a stipulated time.
You will only be rewarded with the credit card sign-up promotion if you meet the criteria. You must also pay your bills on time and in full to avoid penalties on your expenses.
Based on our analysis, three credit cards to consider are – Standard Chartered Unlimited Cashback Card, Citi Cashback Card and Maybank Horizon Visa Signature Card. These three credit cards offer some of the best promotions and sign-up bonuses.
Best Enrollment Credit Card Promotions 2022
1. Standard Chartered Unlimited Cashback Card
- 1.5% unlimited cashback with no min. spending requirement
- Promotions: Enjoy a six-month Disney+ subscription for new SCB members when you activate your card within 30 days of card approval. Promotion valid until March 31, 2022
- Existing cardholders receive a three-month Disney+ subscription
2. Citi Refund Card
- Up to eight percent off groceries and gas, six percent off meals
- Promotions: Receive a Nintendo Switch (worth $499) or Samsung Galaxy A8 (worth $448) or $350 cash through PayNow upon activation and min. $500 spent within 30 days of card approval. Valid until March 14, 2022.
- Existing cardholders will receive $30 cash through PayNow with no minimum spend
3. Signature of the Maybank Horizon visa
- Apply now Foreigners Apply now Foreigners
- Market-leading 3.2 miles/$1 spent on local restaurants and transportation
- Promotions: Get Garmin vivomove Style worth $469, spend $300 for each of two consecutive months after approval (limited to first 2,000 approved applicants)
READ ALSO: Are annual fee credit cards in Singapore worth it?
5. You can get attractive credit card promotions and rewards
How to save money as you spend? A huge benefit of credit cards is the promotions and rewards that come with them.
Wondering what kind of rewards and promotions you can get with credit cards? Examples include cash back, dining benefits, and frequent flyer miles.
Best credit card for cashback: UOB One Credit Card
Wondering how cashback works? Every time you charge a payment to your credit card, you get back some of your expenses as cashback. For most credit cards, cash back is credited to your statement, which would lower your credit card bill.
Otherwise, the cashback is sent directly to your bank account. Additionally, there are two types of cashback rates. These are fixed cashback rates and cashback rates that change based on your monthly spending. One of the best credit cards for cashback is the UOB One credit card.
The UOB One card is one of the most generous cashback cards, with a fixed cashback rate of 5% and an additional 5% on select merchants (Dairy Farm, Shopee, Grab and more).
Best Credit Card for Dining Rewards: OCBC 365 Card
If you’re a foodie, you’ll be happy to know that many credit cards offer dining rewards. For example, some establishments offer special discounts if you pay with a certain bank’s credit card. A credit card with one of the best dining rewards is the OCBC 365 credit card.
The OCBC 365 Card offers great discounts on meals (six percent), gas (five percent), groceries (three percent) and more. Since it also has no annual fee, its reward rates are among the best around.
Best credit card for travel miles: American Express Singapore Airlines Krisflyer Card
The announcement of the new Vaccinated-Travel-Lanes (VTL) is an indication that travel is picking up. If you want to earn rewards on your travels, you should use mileage cards for your travel-related expenses.
You can also save money on your travel expenses. For example, you can use your accumulated miles for free hotel stays. Plus, complimentary limousine transfers and airport lounge access are also exclusive perks that come with Travel Miles credit cards.
American Express Singapore Airlines KrisFlyer Card offers high rewards on Grab transactions (three miles/$1) and two miles/$1 on foreign currency spend, making it an excellent travel credit card.
General criteria for applying for a credit card in Singapore
How to apply for a credit card in Singapore?
In Singapore, most banks require Singaporean citizens and permanent residents under the age of 35 to have a minimum annual income of $18,000 and those between the ages of 35 and 55 must have a minimum annual income of $30,000.
Foreigners, on the other hand, are required to have a minimum annual income of between $40,000 and $80,000, which depends on the bank.
|Financial need||Required documents|
|Adult citizens and permanent residents under the age of 35||$18,000 annual income||NRIC and proof of employment|
|Adult citizens and permanent residents between the ages of 35 and 55||
|NRIC and proof of employment|
|Foreign nationals||$40,000 to $80,000|
|Students||nothing||NRIC and proof of school enrollment|
The bottom line
Have you changed your mind about whether to apply for a credit card?
Not only are credit cards great for your financial well-being, but they also help you earn money through credit card promotions. However, you must use credit cards responsibly to avoid unnecessary debt.
With advances in technology, applying for a credit card is quick and easy. You can simply apply for a credit card online.
Applications are usually processed within minutes, giving you your approval almost immediately.
Ultimately, the decision of whether or not to apply for a credit card depends on your financial ability to repay the fees.
This article was first published in ValueChampion.