11 Things Working Adults In Singapore Ought to know Before Applying For his or her First Charge card

 11 Things Working Adults In Singapore Ought to know Before Applying For his or her First Charge card

Many of us have heard stories of individuals accumulating huge debts from grossly overspending and incurring overtime fees on their credit cards. However, this should not deter you from applying for one and using it for your day-to-day expenses. We strongly think that charge cards can make a lot of financial sense if used correctly.

To eliminate any fear you might have of using multiple credit cards, it's imperative that you understand the functions and sign of charge cards before applying for just one. We've identified 11 things that you need to know before applying for just about any charge card.

# 1 Exactly what is a Charge card?

The first question might seem straightforward, although not everyone fully understands what it is. Credit cards is really a payment card from a bank. It truely does work like a tool to gain access to money in the bank, that has to be repaid at the end of each statement month.

As long as you spend the money for bill entirely, there will be no late charges or interest put into your regular bills. Most banks offer internet banking and mobile banking applications, which may be useful and easy to monitor your charge card expenses and spending habits.

# 2 What goes on Basically Do Not Pay the Bill entirely?

When you obtain your monthly charge card statement, there's a segment indicating the minimum amount you need to pay. The sum is usually a percentage of your outstanding balance or a specified amount (normally $50), whichever is higher. Should you miss the payment cycle or fail to fulfil the minimum payment, you will be slapped with a overtime fee.

Paying just the minimum payment is another bad idea, even when it's punctual. It'll cost you a regular monthly interest and even worse, the eye is compounded daily. The effective interest rate is about 25.9% per year for many banks, which can potentially snowball your outstanding balance into a frightening figure over time.

# 3 Do I Require a Banking account Before you apply For A Charge card?

You do not need to open a bank account with the bank to try to get a credit card with them. This is because your credit card is simply an instrument for short-term borrowing. After each monthly cycle, all that you should do is to repay the financial institution the amount you owe.

Payment of the credit card bill can be achieved through many methods, such as internet banking, cheque, AXS stations (or e-Station) and bank branches.

Alternatively, you are able to set up a GIRO arrangement for your bill to be automatically paid every month. By doing this, you also never miss a payment or end up paying it late.

An interesting point to note is that charge card repayment may also be done via accounts which is not the same as the charge card issuer. For example, you possess an existing bank account with DBS and own a UOB charge card. Rather than opening a UOB account specially for bill payment, that can be done together with your DBS account.

# 4 What Is Your Borrowing limit?

Your borrowing limit may be the maximum amount of money you can “borrow” from the bank in your credit card. When trying to get credit cards, you are able to propose a borrowing limit (subjected to approval), or allow the bank decide the limit for you personally. This is usually a few times of your monthly salary. Should you hold multiple charge cards in the same bank, the loan limit will be shared among the cards. In the event you wish to revise your borrowing limit as a result of change in your earnings, you can do so by submitting your latest income documents.

If the utmost borrowing limit of the credit card is reached, no further transactions can be achieved. In order to refresh your borrowing limit, you have to pay off your credit card bill. Repayment doesn't necessarily need to be at the end of the billing cycle. Should you ever have to refresh your credit limit before the end from the billing cycle, you can simply make an early repayment. For instance, for those who have a credit limit of $6,000, and purchase a computer for $1,500 and pay an additional $4,000 for an upcoming holiday in your charge card at the outset of the month, you'll have $500 of borrowing limit left. To refresh your borrowing limit back to $6,000 to continue paying for your everyday expenses for the rest of the month, you have to make an earlier payment of $5,500.

# 5 How Many Credit Cards Can one Own Concurrently?

There isn't any limit on the quantity of charge cards you can own. If you're interested in more than one card from the same bank, there’s nothing stopping you against simply on-going to try to get it. Within this scenario, your borrowing limit will be shared amongst your cards from the same bank. Applying for another charge card from the same bank also helps you save the trouble of having to re-submit your documents.

If you need to apply for another charge card from a different bank, there’s also nothing stopping you from doing this. In this scenario, you need to submit all relevant documents to them. The upside is you effectively increase your credit limit. This means you can have a $6,000 credit limit with one bank along with a further $6,000 credit limit with another bank – upping your total borrowing limit to $12,000.

Do observe that it's generally not recommended to have a lot of charge cards though, because it will be harder to help keep tabs on the debts. This is because each charge card features its own billing cycle, that is determined as soon as you activate the card. Your credit ratings may also be affected as you still seek more credit from financial institutions.

# 6 What exactly are Mastercard, VISA, American Express, UnionPay, etc?

If you examine your charge card, you need to see at least one logo at the end right corner. These logos are the brand of the payment networks. With thousands of banks in the world, which is impossible for each to obtain their own payment network. Hence, banks leverage on popular payment networks which are recognised in many areas of the world, to facilitate overseas and online transactions.

Common card payment networks include Mastercard, Visa, American Express and UnionPay. Holding prepaid credit cards allow you to make payment in every part of the world that accepts them, whether or not the bank isn't obtainable in that country.

Some charge cards also have co-branding partners to provide deals exclusive to the cardholder. To illustrate DBS Esso Mastercard which supplies Smiles points for eligible spending. What exactly can then be redeemed for fuel Esso.

# 7 What Are the Requirements To Apply For A Credit Card?

Most cards require you to earn a minimum annual gross income of $30,000 for Singaporean citizens and permanent residents. This is equal to a monthly salary of $2,500. Foreigners will often have a greater minimum income requirement to fulfill, usually pegged at $45,000 per year and above. There are cards with higher income requirements as well, but they also typically provide better perks. Certain higher-end cards like the American Express Platinum Card are only from invitation only.

Generally, you need to be a minimum of 21 years of age to try to get credit cards. You will find credit cards that cater to students too who are 18 years old and above. You are required to submit documents for proof of identification (NRIC or passport) and income (payslips, tax documents, CPF statements). For student charge cards, proof of income is not required. These documents can be listed in the financial institution in person, or online straight from your house.

# 8 How Much Are Charge cards Annual Fees?

Although it's free to apply for charge cards, most come with annual fees. Annual fees is often as low as $29.96 for student charge card so that as high as $535 for top-tier charge cards. The most typical annual fee for charge cards in Singapore happens to be $192.60 for credit cards with $30,000 annual income requirement.

Fees for that initial one or two years are typically waived. Some cards also provide annual fee waivers if you meet the stipulated annual minimum spending. It's also common for individuals to request for charge card fee waiver plus some banks even automated the fee waiver system on their hotline.

You must always aim to get the annual fee waived if you aren't paid for paying the fees. For example, the DBS Altitude Visa Signature Card gives you 10,000 bonus miles whenever you pay your annual fee of $192.60. This means “buying” airline miles for a price of just one.9 cents per mile, which is a pretty good value.

Annual fees are collected at the start of each card year. If you're not able to get the annual fee waived, determine that the card is still worth keeping. Otherwise, you might want to pay off the bill (without the annual fee) and terminate the card.

# 9 Can I Withdraw Money From the ATM?

It is possible to withdraw money in the ATM utilizing a credit card. To achieve that, you need to have an existing banking account and linked it to your charge card. If not,what you’re actually doing is utilising payday loans in your charge card – a service that you simply should avoid at all costs.

A cash loan is an act of borrowing from the bank against your credit limit. The main difference between this and spending on your charge card is the fact that interest rates are charged immediately around the amount that you simply withdraw, and compounded daily. Not just is the interest rate higher, a charge may also be charged to make the money advance.

# 10 What's the Distinction between Debit and Charge cards?

When you are making a transaction with your credit card, you are basically borrowing money from the bank to make a purchase. Transactions on an atm card are directly deducted from your balances already in your banking account. You will need a banking account to make use of an atm card even though it is not necessary for charge cards.

Debit cards have no or really low annual fees. However, they also usually offer less perks when compared with credit cards. An atm card are also based on payment networks such as Mastercard and VISA, hence you will be able to make on the internet and overseas transactions.

Unlike credit cards, there is no income requirement to apply for debit cards. It is because there is no risk for the bank, when you are spending money you have inside your banking account. The minimum age requirement can also be more lenient, having a minimum age of 16 years of age when compared with 21 years of age for credit cards.

# 11 Exactly what is a Supplementary Card?

When you apply for any charge card, you're the principal cardholder. As a principal cardholder, you can extend the privileges you enjoy in your credit card for your family by making use of for supplementary cards. You can do so if they're a family member and therefore are above 18 years old. Identification documents are needed although not the wages document.

The credit limit for that card will be distributed to the principal card and also the bill is going to be consolidated. Most supplementary cards have a lower annual fee than the principal card, usually under $100. The supplementary cardholder generally enjoys most of the benefits such as the principal cardholder but there might be some preclusion.

The principal cardholder will be paying the amount spent through the supplementary cardholder. Similarly, failing to do so will result in a debt that is recorded as of the principal cardholder.


From a statistical standpoint, there'll always be an organization who are not able to repay their bills promptly. Compound interest will then work in the bank’s favour when high-interest minute rates are charged on their own outstanding balance. Thus, it's imperative to always repay your outstanding balance promptly as well as in full, to avoid incurring high-interest rates.

We hope you have learned enough to know how you can protect yourself from incurring credit card debts. A credit card has its benefits and drawbacks, but it is important to spend responsibly and tabs on your expenses. When used correctly, using credit cards for payments can produce a lot more sense than using cash.

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