Credit cards have many features and benefits - and that's a good reason why credit cards are becoming popular. If you want to apply for a credit card in the short term, here are 10 things you absolutely need to know. 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 part of them] are subject to an annual fee. Even for cards provided by the same bank, the annual fee is mostly different depending on the card. Generally, the annual fee for offering a better discount card than a regular card is higher.
Although the primary card will almost certainly charge an annual fee, in most cases, the additional card will also charge an annual fee. Sometimes, the annual fee for the supplementary card is waived in the first year or so - this is to make the card more competitive and demanding. Some banks also waive the annual fee for the primary card - 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, the annual interest rate [APR]. The interest rate depends on the type of bank and card that provides the card. Most credit card rates are between 23% and 30% per year in Singapore.
The bank allows an interest-free period of approximately 21 days from the date of publication [again, depending on the type of bank and card], and if the amount is fully repaid within this interest-free window, no interest will be charged. If the amount is not paid before the end of the interest-free period, the corresponding interest expense will apply.
Cash prepaid
Credit cards enable customers to withdraw emergency cash from ATMs. The handling fee for these cash advances is approximately 5%-6% of the deduction, including interest expenses between 23% and 28%. Interest on cash advances is calculated on a daily basis until the amount is fully repaid. Cash advances are usually a risk phenomenon, mainly considering high interest rates. Therefore, if you use a credit card to withdraw funds, it is recommended that you repay the amount in full at the earliest.
Monthly minimum payment
As a credit card customer, you will need to pay a minimum monthly amount - if possible, the full amount - equivalent to 3% of the total monthly outstanding balance. If you must avoid late payments, you must pay the minimum amount on the payment due date. The minimum payment amount in your credit card statement can also include pending minimum payments, late payments, cash advances and excess fees [if applicable] for the previous months.
Late payment
If the minimum amount is not paid on the payment due date, the bank will charge a fee, usually called a late fee. The delayed payment for a Singapore credit card can range from S$40 to S$80 depending on the bank that provided the card.
Excess fee
The excess fee applies, if not included in the assigned credit line, it is levied by the bank. Singapore's credit card excess fees range from S$40 to S$60.
Cash back and bonus points
One aspect that makes credit cards an exciting phenomenon is the bonus points/returns that are available at the time of purchase. Different card structures are different, allowing you to get cash back or bonus points or both at the time of purchase. Some cards allow you to earn bonus points on groceries, while other cards allow you to earn cash back or reward points through airline reservations, retail purchases, and more. Cash back and bonus points are specific to certain credit cards, and the amount of revenue depends on the type of card and the bank that provides the particular card. Bonus points earned at the time of purchase can be converted from card reward catalogues to exciting coupons, discounts and tempting shopping/retail purchases/online offers.
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 interest-free credit card has an interest-free period of 6 months to 1 year, depending on the card you are applying for. In the case of a balance transfer card, the bank charges a processing fee and can also charge interest [illegal priority over the case]. During the interest-free period [6 months - 1 year, depending on the card], the normal interest charges on the card apply to transactions and cash advances.
Singapore Airlines Mileage Program
Some credit cards [mainly premium credit cards] offered by some banks in Singapore allow you to earn miles by converting the bonus points you receive when you purchase the card. Often, airline miles cards will incur higher annual fees due to their advanced nature. As a quality credit card customer, you can accumulate enough air miles to completely offset your next vacation!
Credit score
In short, your credit score is a prediction of your past debt management. It takes into account your payment model and documents examples of delayed payments, credit excesses, loan defaults, periodic/interim payment history, and lets the bank know how you will handle the debt in the future. A good credit score is critical to obtaining a loan application and credit card application.
If you are considering applying for a credit card, the above points will come in handy. These aspects will give you a comprehensive understanding of how credit cards operate in Singapore and give you a better understanding of your expectations. If you are not satisfied with the current card and want to switch to another credit card, these can also be used.
Orignal From: Looking for a new credit card? Here are ten things you should know.
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