Credit cards come with a host of features and rewards – a fantastic cause why credit cards are a well known phenomenon. If you are looking to apply for a credit card anytime quickly, here are ten things you unquestionably want to know. These points will give you a better understanding of how credit cards function and what you can anticipate from them.
Annual costs on credit cards
All credit cards supplied by banks (at least a significant percentage of them), come with an annual fee. The annual charge mainly varies from one particular card to one more, even in the case of cards provided by the same bank. Commonly, Premier cards that present greater advantages than typical cards come with a higher annual fee.
Even though the Major card just about absolutely comes with an annual charge, supplementary cards also come with an annual charge in most instances. Occasionally, the annual fee on the supplementary card is waived for the first year or so – this is to preserve the card a lot more competitive and in-demand. Specific banks waive the annual fee on the principal card as nicely – for the initial year, or very first two years, or longer.
Annual price of interest
All transactions you make utilizing your credit card attract a specific rate of interest identified as the annual percentage rate of interest (APR). The interest rate is dependent on the bank that is offering the card and the kind of card. The interest price for most credit cards is Singapore is between 23% p.a. and 30% p.a.
Banks allow for an interest totally free period of about 21 days from the release of the statement (once more, this depends on the bank and the type of card) and do not charge an interest if the amount is repaid in full inside this interest no cost window. If the quantity isn’t paid prior to the end of the interest free period, interest charges will accordingly hold applicable.
Money advance charges
Credit cards enable shoppers to make emergency cash withdrawals from ATMs. These cash advances carry a handling charge of about five%-6% of the withdrawn quantity, besides interest charges that fall in the variety among 23% and 28% p.a. Interest on money advances is computed on a day-to-day basis at a compounding rate till the quantity is repaid in full. Cash advances are generally a risky phenomenon, mostly taking into consideration the higher interest charges. So if you withdraw revenue making use of your credit card, it is advisable that you repay the quantity in complete at the earliest.
Minimum month-to-month payments
As a credit card consumer, you are expected to pay a minimum quantity each month – or the whole quantity if that is doable – amounting to three% of the total month-to-month outstanding balance. Minimum payments have to have to be made by the payment due date if late payment charges have to avoided. The minimum payment in your credit card monthly statement can also incorporate pending minimum payments from previous months, late payment charges, cash advance charges, and overlimit fees, if they hold applicable.
If the minimum amount isn’t paid by the payment due date, banks levy a specific charge, typically referred to as the late payment fee. The late payment charge for credit cards in Singapore can be anywhere in the variety amongst S$40 and S$80, depending on the bank providing the card.
Overlimit fees
Overlimit costs hold applicable and are levied by the bank if the allocated credit limit is exceeded. Overlimit costs can variety involving S$40 and S$60 for credit cards in Singapore.
Cashbacks and reward points
An aspect that tends to make credit-cards a pretty fascinating phenomenon is the reward points/cashbacks that can be earned on purchases. Unique cards are structured differently and permit you to earn either cashbacks or reward points or both, on your purchases. Some cards enable you to earn reward points on groceries, whilst some other let you earn cashbacks or reward points on air ticket bookings, retail purchases, and so forth. Cashbacks and reward points are functions that are specific to particular credit cards and the extent of rewards depends on the variety of card and the bank providing the specific card. Reward points earned on purchases can be converted into fascinating vouchers, discounts and desirable shopping/retail buy/on-line deals from the card’s rewards catalogue.
Balance transfers
Particular credit cards enable you to transfer your entire credit card balance to that specific credit card account, enabling you to consolidate your debt. Balance transfer credit cards come with an interest cost-free period of six months – 1 year, based on the card you have applied for. In the case of balance transfer cards, banks charge a processing fee and may also charge an interest (unlikely in a majority of instances). Following the interest no cost period (6 months – 1 year depending on the card), normal interest charges on the card are applicable for transactions and cash advances.
Air miles programmes in Singapore
Particular credit cards (largely premium credit cards) provided by some banks in Singapore enable you to earn air miles by converting your reward points earned on purchases making use of the card. Typically, air miles cards come with a higher annual charge owing to their premium nature. As a customer of a premium credit card, you can accumulate enough air mile points to completely offset your subsequent trip!