Credit Card Crazy in Singapore, for the Uncrazy
Prevailing wisdom that we should hold as few credit cards as possible. Absolutely sound advice for those in debt or those who cannot control their shopping impulses.
But what about those who are good at handling their money and are disciplined when it comes to spending? In Singapore, having more credit cards can actually help you save and earn.
Credit Cards: Why The More, The Better...
Just why is it that I think applying for as many cards as possible makes perfect money sense in Singapore?
- JOINING GIFTS AND BENEFITS. The market is really competitive here, so banks are out there lining up to give you attractive items and waivers of annual fees, so why not take full advantage of them? Just the other day, I received a flyer inmy postbox with the offer of a free iPod Shuffle for new applicants. And a couple of months ago, another bank was enticing new sign-ups with a $100 credit on approval of application.
- DISCOUNTS. Stores, restaurants, travel agents, etc. often have exclusive tie-ups with credit card issuers which entitles customers who use specific credit cards to additional discounts or freebies. I'm not advocating unnecessary spending just to get a discount or a free gift. However, if you were going to purchase an item anyway, why not take advantage of the further discount offered to holders of a certain credit card? For example, my friend received an additional 5% discount on a new laptop by using one of my credit cards, one she did not have yet (she applied for it after that experience). In fact, it's quite common for savvy customers in Singapore to ask before they pay for anything whether the store is having any credit card discounts or promotions, and which for which credit card or cards.
- CASH REBATES. Nowadays, quite a few banks market credit cards which give you cash rebates when you spend or pay your bills using your card. You were going to buy your groceries anyway, so why not pay using your credit card, and get some cash back? A quick note: if you use your credit card a lot in the course of your work, it may be more advantageous to stick to credit cards which offer points which you can redeem for various items.
- ANNUAL FEES? WHAT ANNUAL FEES? But, but, but.. you ask: But don't I have to pay the annual fees on the many cards? In Singapore, the issuer is likely to, in a vast majority of cases, waive the annual fees without any fuss. All you have to do is call up when you're billed the annual fee. They would rather waive the fees than lose you as a customer. In the unlikely event that you get a refusal, just can always just cancel the card.
A few tips...
- PAY IN FULL USING GIRO. Sign up for Giro for all your credit cards, a system which lets the credit card company debit the full payment of each month's bill direct from your bank account. It saves you a lot of time going around paying your various card bills. Even better, you'd then be conscious that you should limit your spending to the balance you have in your bank account (If your bank account is always short, then that's a big hint to you that you should not be holding any credit card at all).
- USE THE CREDIT CARD BILL AS BUDGETING TOOL. In Singapore, it's possible to pay for a vast majority of your daily needs with your credit card. Since the bill comes with all your charges itemised, why not use it to review your budget and spending.
- DO NOT SIGN UP FOR AN UNSECURED CREDIT LINE. Often, when you sign up for a credit card, you will also be "encouraged" you to sign up for an unsecured credit line as well. If your finances are in order, you should have no need at all for unsecured credit lines, so don't apply for them. If you're short of money for necessities, it makes more sense to explore other means -- other sources of income, selling off things you don't need, cutting back on your spending, etc. -- rather than rely on such credit lines and getting into debt.
- INTEREST-FREE INSTALMENT. Another common "benefit" offered to credit card holders is a 12-, 24- or 36-month interest-free instalment plan which encourages you to spend future income. But say you actually have the money for the item already saved, is it a good idea to take advantage of the interest-free instalment? Sure, if you have the discipline to keep the money aside over the next months (and not be tempted to dip into it to buy other things) to pay each and every instalment in full. You stand to gain a very marginal amount from the interest earned on the money you kept aside in your savings account to pay for the instalments.
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