LOOKING FOR A NEW CREDIT CARD? HERE ARE 10 THINGS YOU SHOULD DEFINITELY KNOW
Credit cards come with a number of features and benefits, a good reason why credit cards are a popular phenomenon. If you are looking to apply for a short-term credit card, here are 10 things you definitely need to know. These points will allow you to better understand how credit cards work and what you can expect from them.
Annual fees on credit cards
All credit cards offered by banks (at least a significant percentage of them) have an annual fee. The annual rate varies mainly from one card to another, even in the case of cards offered by the same bank. In general, Premier cards that offer better benefits than normal cards have a higher annual rate.
While the Primary card almost certainly comes with an annual fee, the supplemental cards also come with an annual fee in most cases. Sometimes, the annual rate of the complementary card does not apply during the first year or so, this is to keep the card more competitive and requested. Certain banks also waive the annual fee on the main card, during the first year, or the first two years, or more.
Annual interest rate
All transactions you make with your credit card attract a certain interest rate known as the annual percentage interest rate (APR). The interest rate depends on the bank that offers the card and the type of card. The interest rate for most credit cards is Singapore, it is between 23% per year. and 30% p.a.
Banks allow an interest-free period of approximately 21 days from the publication of the statement (again, this depends on the bank and the type of card) and do not charge interest if the amount is fully refunded within this window without interest. If the amount is not paid before the end of the interest-free period, interest charges will be considered applicable.
Cash advance charges
Credit cards allow customers to make emergency cash withdrawals from ATM’s. These cash advances imply a handling charge of approximately 5% -6% of the amount withdrawn, in addition to interest charges ranging between 23% and 28% annually. Interest on cash advances is calculated daily at a compound interest rate until the amount is fully refunded. Cash advances are usually a risky phenomenon, especially given the high interest charges. Therefore, if you withdraw money with your credit card, it is recommended that you reimburse the total amount as soon as possible.
Minimum monthly payments
As a credit card customer, you must pay a minimum amount each month, or the total amount if possible, which equals 3% of the total monthly outstanding balance. Minimum payments must be made before the payment due date if late payment charges should be avoided. The minimum payment on your credit card monthly statement may also include outstanding minimum payments from previous months, late payment charges, cash advances and excessive limit charges, if applicable.
Late payment charges
If the minimum amount is not paid before the payment due date, banks impose a certain fee, commonly known as a late payment rate. The charge for late payment of credit cards in Singapore can vary between S $ 40 and S $ 80, depending on the bank offering the card.
Excessive limit charges apply and the bank applies them if the assigned credit limit is exceeded. Limit rates may vary from S $ 40 to S $ 60 for credit cards in Singapore.
Cashbacks and reward points.
One aspect that makes credit cards a very exciting phenomenon is the reward points / cash backs that can be earned with purchases. The different cards are structured differently and allow you to earn refunds or reward points or both, on your purchases. Some cards allow you to earn reward points in groceries, while others allow you to earn refunds or reward points on airline ticket reservations, retail purchases, etc. Refunds and reward points are specific features of certain credit cards and the scope of benefits depends on the type of card and the bank offering the particular card. Reward points earned on purchases can be converted into interesting coupons, discounts and attractive purchases / retail purchases / online offers from the card’s rewards catalog.
Certain credit cards allow you to transfer the entire balance of your credit card to that particular credit card account, which allows you to consolidate your debt. Credit cards with balance transfer have an interest-free period of 6 months to 1 year, depending on the card you requested. In the case of balance transfer cards, banks charge a processing fee and may also charge interest (unlikely in most cases). After the interest-free period (6 months – 1 year depending on the card), normal interest charges on the card are applicable for transactions and cash advances.
Air mileage programs in Singapore
Certain credit cards (mainly premium credit cards) offered by some banks in Singapore allow you to earn airline miles by converting your earned reward points into purchases with the card. Typically, airline miles cards have a higher annual rate due to their premium nature. As a premium credit card customer, you can accumulate enough air miles points to fully compensate for your next vacation.
In summary, your credit score is a projection of how well you have handled your debt in the past. It takes into account your payment patterns and records instances of late payments, credit limits, loan defaults, regular / timely payment history, etc., and gives banks an idea of how good debt management can be. . in the future. A good credit score is vital to obtain approval of loan and credit card applications.
The points mentioned above will be useful if you are considering applying for a credit card. These aspects will give you a comprehensive understanding of how credit cards work in Singapore, giving you a better idea of what to expect. This will also work if you are not satisfied with your current card and are looking to change to another credit card as well.