Tips to choose the best credit card

Rewards

The biggest decision that you need to make before getting a credit card is whether you are looking for air miles, reward points or cashback. It is a well-known fact that Singaporeans love to travel, but most cards that offer air miles are useful only if you opt for long-haul flights. However, an average household in Singapore spends a major portion of their expenses on groceries and dining. So, know what categories you can earn miles on. There are also many rewards cards that allow you to redeem your points in the form of miles. And if you prefer getting some amount back each month rather than miles, discount vouchers, etc. you can choose a cashback card.

Credit limit

Most credit card providers fix your credit limit based on your income. On most occasions, it varies from hundred to thousands of Singapore dollars. Ideally, your expenditure should be within your limit. If you go above your limit, your score is likely to get affected and there is a penalty when that happens.

Narrow your choices by asking yourself right questions

Before applying for a card, you should ask the following questions under the specific categories:

For 0% APR and low-interest cards

• Does this card offer rewards?
• What is the balance transfer policy for this card?
• How long will the 0% APR period last and what is the current interest rate?

For secured and student cards

• Can I move to a better card later?
• What are the charges and annual fee associated with the card?
• Will this card help me build credit?

For travel, cashback and rewards card

• How much are the rewards worth and how quickly can I earn them?
• How easy is it to understand cashback, miles or reward points associated with the card?
• How will I spend my money?

Interest rates

With most cards in Singapore, the interest rate is fixed between 24% and 28% p.a. However, you must be careful as a card with a fixed interest rate can also change. These changes are triggered by factors such as late bill payment, going over your credit limit or when the credit card provider chooses to change it.

Balance calculation method

If you choose to pay only the balance amount and carry forward the balance to next month, you must understand how the charges are computed. One of the commonly used ways is an average daily balance. Here, the balance is added on a daily basis and divided by total days in the billing period. Avoid all cards that calculate balance using two billing cycles.

Fees and penalties

There are many credit cards in Singapore that waive the annual fee. However, cards with an annual fee typically offer more benefits and rewards and also include annual benefits like a free hotel stays or goodies. You will have to determine if you wish to have a card with no annual fee or one with a yearly fee. You can make this decision based on how frequently you are planning to use the card.

Several cards in Singapore are ideal for budget-conscious people as the annual fee is often waived. Other offer added perks and bonuses upon paying the annual fee. You can choose one according to your preferences.