Credit cards – Is it for me? A guide for beginners in Singapore
A great savings and reward tool if used correctly! Here’s a guide to choosing the best credit cards in Singapore.
“Aiya, credit card only for the rich…”,” Wow, you must be very rich to own a credit card!”
These are some of the reactions from my friends. Most people have a misconception about credit card some of which includes credit card is limited only to the rich, as only they can afford.
I am here to tell you that is false. credit cards are not only useful for saving, but it also helps to build your credit score to future loans. Let’s see how you can use this to your advantage with this credit card guide!
What is a Credit Card?
A credit card offers you the option to make purchases immediately and pay later. The bank pays the merchant, and you pay the bank back later. It is like your friend paying for your Korean BBQ meal while you Paynow him a while later.
Types of Credit Card
There are three main types of credit card – miles, reward points, and cashback. Each suits a different purpose.
Miles
Those who travel frequently may prefer miles as these credit cards dish out miles directly such as the Amex Singapore Airlines KrisFlyer Ascend credit card, such miles may be redeemed for air tickets. They will net you 1.2 miles per dollar for most local expenses. In my opinion, it is more worth saving up these miles to exchange a business class flight to your favorite country! Here’s a chart for reference.
Usually, the miles card comes with some sort of bonus like a limited complimentary travel lounge or free travel insurance. For those who seldom travel, especially during these Covid-19 times, there is another solution. The miles can be used to purchase items in KrisShop or their partners.
I am hoping to save up enough miles to redeem it for a trip to Japan…when travel becomes the norm again. Haiz…
Cashback
Some may choose to have their payout in cash instead, in this case, the Cashback card is for you! There is a minimum spending requirement to most cashback cards though, such as DBS Live Fresh and many others.
There are also unlimited cashback cards that have no minimum spending unlike the former. However, their cashback rate is usually quite low, around 1.5%. The newly launched UOB absolute card gives up to 1.7% base cashback (an additional 3.3%bonus upon spending the first $3000)!
I am currently using Standard Chartered Unlimited for my needs as I don’t want the hassle of keeping track of the minimum spending requirement. SC unlimited allows me to use it for Simplygo as well! Amex True Cashback is another card I use to top up to pay for my university fees by using Grab Pay Top up to earn that cash back. Double-dip!
Reward
Rewards credit card offers reward points instead. Reward points accrued may be redeemed for miles or special reward items such as e-commerce platform vouchers or discounts in restaurants. Additionally, most can convert the points into cash rebates as well. However, that may not be the most efficient way to use your points.
Some examples are HSBC Revolution and Citi Rewards cards.
Before applying for a credit card, always look at their Terms and conditions (TNCs).
Tips
- Note the spending exclusions that some cards limit. Common exclusions include insurance and hospital bills. (Use Amex True Cashback and UOB absolute for these categories instead!)
- Banks use Merchant Category Codes (MCC) as a guideline to determine their rewards. Before applying for a credit card, always look at their Terms and conditions (TNCs).
- How to determine if a store is under the eligible MCC? Use WhatCard to find out if your card is eligible. Note that it is an unofficial website so not all information may be accurate there.
- Always note the sign-up bonus! Compare the bank’s sign-up bonus with Singsaver or Moneysmart. Usually, the latter two offers better rewards. Yes, they are quite reliable, although the reward times may take up to several months. I have gotten cash, Bose Earbuds, and even a sony headphone from these websites! Check their promotion TNCs too for the criteria.
- The sign-up bonus usually is attractive only to new-to-bank customers. Different banks have different timings. I have done the research, so you don’t have to!
| Bank | Months |
| Citibank | 13 months |
| DBS/Standard Chartered/HSBC/OCBC | 12 months |
| Maybank | 9 months |
- Want to keep track of your credit score? Head over to the Singapore Credit Bureau, usually after a credit card is denied, it will allow you to check your credit score.
Which one is for me?
Different credit card appeals to different kind of people. Huge spenders may prefer UOB one for their juicy cashback, while a travel wanderlust may choose miles over cash for their next flight trip. Ultimately, it depends on your taste.
This concludes my guide to credit cards in Singapore. Do some research and you will find the right one suitable for you!
The above are just my opinions, no affiliates or sponsorships are involved. Not financial advice.
Thanks for the support, you readers are my motivation!
