Cashless payment is predominantly one of the best and easiest way to pay for your purchases these days. Singapore stands out to be one of the world’s leading digital transaction countries next to Hong Kong and the United States. This gives more reason for credit card providers to compete against each other and market their best plans. Thus, the use of credit cards is certainly not exotic in this nation. 

So, why are credit cards extremely popular? Is it a necessity or is it merely an accessory? Here’s what you need to know about credit cards. 

Credit Cards 101

To understand how credit cards work, it is first crucial to know what credit cards actually are. 

A credit card is a contemporary way of paying. You are allowed, within a certain limit, to loan money from the bank or a credit card company to pay for your spends. There will be an agreement made between the credit card provider and you on the monthly payments you have to repay. 

Just like a debit card, you either swipe, tap or insert your credit card to a card reader. You can spend up to the maximum limit approved for you by the credit card provider. The difference is that you will receive a bill every end of the month which will require you to pay a minimum fee based on your expenses. Your payments will also incur interest rates depending on the sum you have loaned. 

The wise will spend within their monthly budget and pay off their credit card bills in full at the end of every month to avoid incurring a high-interest rate while the not so wise will opt to pay only the minimum amount and incur a high-interest rate. 

Using your credit card wisely will lead you to financial stability while reckless usage will lead you to credit card debts. 

Now that you understand the ABCs of a credit card, its time to learn the privileges you will miss if you do not own one. 

Perks Of Owning Credit Cards

If you think a credit card is merely a determinant of an individual status in a society, then you are absolutely wrong. Owning a credit card speaks volume of your financial understanding. There are incredible perks of being a credit cardholder. 

• Multiuse privileges 

You will have access to a certain amount of money depending on your approved maximum limit. It is particularly useful as an emergency fund when you are in need of a large amount of cash without prior warning. If you have a credit card, you can deal with the emergency first and then pay it off before the due. Besides, you also get to use your credit card as an EZ-Link card. This way you don’t have to worry about the card balance every time you travel.

• The savings, rewards and rebates

Why not earn while you spend? You are entitled to exclusive rewards and cashback when you purchase via credit cards. There are many types of credit cards that are offering you rebates and amazing deals. Besides saving money, you will also get to enjoy the exciting gifts and miles points offered by the credit card providers. 

• Cheaper overseas transactions 

Pay less for overseas payments. As a matter of fact, you can use a no foreign exchange fee credit card when you travel. As cashless payments are encouraged worldwide, you can save yourself from the fluctuating exchange rates. Additional costs on certain service charges can be deducted with the use of your credit card. 

• Easy credit history

Your credit card can be your easy ticket to loan approvals. Maintain a clean payment history to your credit card(s) and you will be one step closer to full housing, car or personal loans. A clean credit report gives the bank confidence in your credibility of paying promptly. You can also benefit from low interest rates with a clean credit record. 

Credit Cards Starter Kit

Get your essentials right before you take the next step. In most cases, people understand the need for having a credit card. But, they make a mistake by disregarding a few key points before deciding on the most suitable credit card for their lifestyle.

• Know your spending preferences

Are you a frequent traveller or a regular grocery shopper? It is important to understand your spending patterns before you apply for a credit card. Once you are aware of it, you can carefully select the best credit card for your use. For instance, if you are not a regular traveller having a miles credit card might not benefit you much. However, if you spend a lot on groceries every month, having a cashback or rewards credit cards will help you save some money. 

• Find out the type of card you can afford

You have to realise that your monthly income determines the type of credit card you can afford. Some credit cards have minimum spending limits that affect your cashback rates. Apart from that, you also need sufficient funds to repay the money you loan.

• Keep an eye on the promotions

During these promotional periods, new customers are most likely allowed to spend a big amount within the first few months. The sum can help you in planning a wedding or purchasing furniture. Most credit cards offer welcome rewards and discounts that you certainly wouldn’t want to miss. You might even get your first year annual fee waived off. 

• Be a responsible customer

Bite only what you can chew. Take note of the credit card’s interest rate and other charges so you can manage your payments properly. As the credit card provider keeps your payment record in detail, you need to maintain a clean payment history to sustain your financial standing.

Credit cards, to get or not to get?

If you can manage your money wisely, credit cards can be a big advantage to better your finances. But, if you have trouble managing money, you need to get that straight first before applying for a credit card.