Looking for a new credit card? This is 10 things you absolutely should know.

Credit cards have many features and benefits – credit cards are a good reason to be popular. If you plan to apply for a credit card as soon as possible, you absolutely need to know the following 10 things. These points will give you a better idea of ​​how credit cards work and what you expect from credit cards.

Annual credit card fee

All credit cards provided by banks [at least a large percentage] are accompanied by an annual fee. Even for cards provided by the same bank, the annual fee varies from one card to another. In general, VIP cards that offer a better offer than a regular card will charge a higher annual fee.

Although the primary card is almost certain to charge an annual fee, in most cases, the affiliate card will also be charged an annual fee. Sometimes, the annual fee for a supplementary card is waived in the first year or so – this is to make this card more competitive and demanding. Some banks also waive the annual fee for the primary card – first year or first two years or longer.

Annual interest rate

All transactions you make with a credit card attract a certain interest rate called the annual interest rate [APR]. The interest rate depends on the type of bank and bank card that provides the bank card. Most credit card rates are between 23% and 30% per year in Singapore.

The bank has a non-interest period of approximately 21 days from the date of publication of the statement [again, depending on the type of bank and card], and if the amount is fully repaid within this interest, no interest free window will be charged. If the amount is not paid before the end of the interest-free period, the interest charge will be charged accordingly.

Cash advance payment

Credit cards enable customers to urgently withdraw cash from the ATM. The withdrawal amount of these cash advances is about 5%-6% of the withdrawal amount. In addition, the annual interest expense is between 23% and 28%, and the interest on the cash advance is calculated at a complex interest rate every day until interest is generated. The money has been repaid in full. Cash advances are often a risky phenomenon, mainly considering high interest charges. Therefore, if you use a credit card to withdraw funds, we recommend that you repay the full amount as soon as possible.

Minimum monthly payment

As a credit card customer, you will need to pay a minimum amount [if possible] or a full amount each month, which is 3% of the monthly outstanding balance. If you must avoid late payments, you must make a minimum payment before the payment due date. The minimum payment amount on the credit card's monthly statement can also include the minimum payment for the first few months, late payment, cash advances and overruns [if applicable].

Late payment

If the minimum amount is not paid before the payment due date, the bank will charge a fee, usually called a late fee. In Singapore, credit card late fees can range from S$40 to S$80 depending on the bank that provided the card.

Excess fee

Excess fees apply, if the excess credit is exceeded, it is charged by the bank. In Singapore, credit card overruns may range from S$40 to S$60.

Cash back and bonus points

One aspect of making credit cards a very exciting phenomenon is reward points/cash returns that can be earned through purchases. Different cards have different structures that allow you to earn cash back or reward points at the time of purchase, or both. Some cards allow you to earn bonus points on groceries, while others allow you to get cash back or bonus points through ticket reservations, retail purchases, and more. Cash back and bonus points are specific to certain credit cards and the level of preference depends on the card type and the bank that provides the particular card. The reward points earned by the purchase can be converted from the card's rewards list to exciting coupons, discounts and attractive shopping/retail purchases/online transactions.

Balance transfer

Some credit cards allow you to transfer your entire credit card balance to that particular credit card account, allowing you to consolidate your debt. The balance-free credit card has an interest-free period of 6 months to 1 year, depending on the credit card you applied for. For balance transfer cards, banks charge fees and may charge interest [which is unlikely in most cases]. After the interest-free period [6 months to 1 year, depending on the card], the normal interest charges on the card apply to transactions and cash advances.

Singapore's Airline Mileage Program

Certain credit cards offered by certain banks in Singapore [mostly premium credit cards] allow you to earn airline miles by converting the bonus points you earn when you purchase the card. Usually, due to the superior nature of the flight mileage card, its annual fee is higher. As a premium credit card customer, you can accumulate enough airline miles to completely offset your next vacation!

Credit score

In short, your credit score is a prediction of how you used to manage your debt. It takes into account your payment method and records overdue payments, credit overruns, loan defaults, periodic/timely payment history, etc., and gives the bank an idea of ​​how well you will be dealing with debt in the future. A good credit score is critical to obtaining approval for a loan application and credit card application.

If you are planning to apply for a credit card, the above points will be very convenient. These aspects will give you a comprehensive understanding of how Singapore credit cards work, giving you a better understanding of what you can expect. If you are not satisfied with the current card and you want to switch to another credit card, these methods will also work.

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