Best Credit Cards for Beginners in Singapore

In a 2022 survey by the Institute of Policy Studies and Talking Point, 35% of participants admitted to spending more than they earned, with over 60% stating they used to subscribe to “buy now, pay later” (BNPL) schemes. How serious is the prevalence of these schemes? According to the Monetary Authority of Singapore, BNPL transactions reached around S$440 million in 2021. With the growing popularity of BNPL, navigating credit card ownership has become trickier, especially for younger generations.

If you’re a Gen Z, a younger millennial, or a guardian looking for the right credit card for a young adult, consider this guide to credit card recommendations and tips.

START WITH THE ELIGIBILITY

While requirements vary between financial institutions, these are the most common requirements:

a. Minimum Annual Income: typically S$30,000 for Singapore citizens/PRs or S$45,000 for foreigners
b. Minimum Age: at least 21 years old
c. Good credit history: Certain cards may require a solid credit record of several years

IDENTIFY THE RIGHT CREDIT CARD FOR YOU

Identifying the right credit card can feel overwhelming because of the variety of options in the market today. A good place to begin is by examining your lifestyle. Are you a frequent traveler or do you spend more money on groceries? After identifying the factors that matter to you the most, you can shop around and compare each credit card’s features.

On that note, here are some of the best credit cards for beginners in Singapore:

#1: FOR AVID TRAVELERS: KRISFLYER UOB CREDIT CARD

The KrisFlyer UOB Credit Card allows you to earn 3 miles per S$1 spent on Singapore Airlines, Scoot, KrisShop, and Kris+ purchases. Additionally, you can earn 3 miles per S$1 spent on dining, food delivery, online shopping, travel, and transport. For all other spending, you’ll earn 1.2 miles per S$1.

What’s more? From now until 30 Sep 2024, you can take advantage of a promotion offering up to 31,000 miles and a first-year annual fee waiver (worth S$196.20, including GST) when you spend a minimum of S$2,000 within 60 days of approval (T&Cs apply). Apply for KrisFlyer UOB Credit Card at uob.com.sg.

#2: FOR TRANSPORT AND SHOPPING REWARDS: DBS LIVE FRESH CARD

If you are looking for a credit card that rewards you for transportation and shopping, look no further than the DBS Live Fresh Card. It offers up to 6% cashback on transportation and shopping, along with 0.3% unlimited cashback on every eligible purchase. Keep in mind that a minimum spend of S$800 is required, with a cashback cap of S$70.

Best of all? There’s a promotion of S$150 cashback when you spend a minimum of S$800 within 60 days of card approval (T&Cs apply). This promotion is valid until 30 Sep 2024. Learn more about the DBS Live Fresh Card at dbs.com.sg.

#3: FOR ONLINE & IN-STORE SHOPPING: CITI REWARDS CARD

The Citi Rewards Card allows you to earn 10x points or 4 miles per S$1 on online and shopping purchases. You can also earn 1x point for all other spending. Additionally, you can redeem your points for every purchase via the Citi Mobile App. You will get S$1 with every 440 points.

If you’re interested in applying now, you can receive up to S$450 in cash rewards or 5,540 SmartPoints, plus a chance to win a Rolex Submariner Date 126610 (T&Cs apply)! Hurry, as the promo runs until 13 Sep 2024. Sign-up for Citi Rewards Card at citibank.com.sg.

READ THE ANNUAL FEES

Much like the benefits, annual fees vary across credit cards. Some cards offer no annual fees, while others may waive the fee for the first year. However, don’t automatically choose a no-fee card as you need to compare the features before deciding what suits you best.

Pro tip: Sometimes, you can get the annual fee waived simply by requesting it from your bank. It doesn’t hurt to try!

FINAL THOUGHTS

Getting your first credit card is an exciting milestone, but it also brings new responsibilities. As a newbie, it is important to do your research first before committing to a credit card application. Then, always monitor your spending and stay within your credit limit to avoid financial stress. Lastly, make sure to pay off your balance on time to build a solid credit history.

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Disclaimer: All data provided is accurate as of 10 September 2024. Promotional details are subject to change at the discretion of the respective banks. Please conduct your own due diligence when comparing credit cards and their offers before signing up, as individual lifestyles and needs may vary. Use this article as a guide only. Thank you.

Sources: 1 & 2

 

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Should You Help Your In-Laws Financially?

“Ding!”, you just receive an SMS from a family member that’s asking for financial support during tough times. We’ve all been there! When this happens to me, I give only what I’m comfortable losing as I don’t want to ignite conflicts. For starters, I’ve seen friends sacrifice their own financial stability to help family members, leaving them unable to save for their own future. It’s a tricky balance, and the emotional weight can be very heavy.

Watching someone you love struggle financially can be heartbreaking. If you have the means, it’s natural to want to help. But before you do, take a moment to consider the potential consequences. As financial expert Dave Ramsey wisely says, “The borrower is slave to the lender.” The last thing you want is for a family member to feel indebted to you, or worse, to start viewing you as a financial safety net. This dynamic can quickly strain relationships, especially if they start reaching out to you only when they need help. On that note, consider these things when deciding to help:

#1: TAKE THINGS SLOW

When a family member asks for money, emotions can run high. You might feel that saying “yes” is the only way to maintain the relationship. But it’s important to take your time before making a decision.

Consider whether you can truly afford what’s being asked. If you’re uncertain, it might be wise to discuss it with your spouse.

#2: THINK OF THE MARITAL IMPACT

If you’re married, giving financial support to in-laws or your own parents adds another layer of complexity. The last thing you want is to create tension between you and your spouse. Money issues are one of the leading causes of divorce, so it’s crucial to ensure both partners are comfortable with the decision.

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If lending money might strain your finances or relationship, explore other ways to support your family members such as helping them apply for government grants.

#3: CONSIDER GIVING A MONETARY GIFT

If you’re financially secure and your spouse agrees, consider offering a financial gift instead of a loan.

If your in-laws are facing hardship due to job loss or health issues, a one-time gift can provide relief without the expectation of repayment, which can ease any potential tension.

#4: BE PREPARED TO SAY NO

If you decide that you can’t or shouldn’t provide financial help, it’s important to approach the conversation with honesty and empathy. For instance, it might be best to wait until your in-laws are more emotionally calm before having this discussion. Setting boundaries is important, but timing and sensitivity can make a big difference in how your decision is received.

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Helping family members in financial need is never an easy decision. By considering the potential impact on your relationships and financial health, you can make a choice that supports both your loved ones and yourself.

Sources: 1 & 2

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How Your Child’s Money Habits Affect Old Age

As parents, we play a vital role in shaping our children’s behavior and values, including their money habits. While we often focus on the immediate impact of teaching our kids about financial responsibility, it’s crucial to recognize that these habits can have far-reaching consequences that extend well into old age.

We’ll explore the profound influence of childhood money habits on one’s financial well-being during the golden years.

EARLY FINANCIAL EDUCATION
Instilling a strong foundation of financial literacy in children sets them on a path towards a secure future. Teaching them basic concepts like saving, budgeting, and distinguishing between needs and wants establishes healthy money habits from an early age. These early lessons can profoundly impact how they handle their finances in adulthood, leading to better financial decision-making during retirement.

POWER OF SAVING
Encouraging children to save money fosters a sense of delayed gratification and financial discipline. By teaching them the importance of setting aside money for the future, we equip them with the tools needed to build a retirement nest egg. Children who develop a habit of saving are more likely to continue this practice throughout their lives, ensuring a more comfortable retirement.

UNDERSTANDING DEBT & CREDIT
Educating children about the responsible use of credit and the potential dangers of debt is crucial. When children learn to differentiate between good and bad debt, they are more likely to make informed decisions about borrowing in adulthood. By cultivating a sense of caution and encouraging responsible credit usage, we help them avoid financial hardships in their later years.

ATTITUDES TOWARDS WORK
The work ethic and attitudes towards earning money that children develop during their formative years can significantly impact their financial stability in old age. Teaching children the value of hard work, ambition, and perseverance can instill a sense of responsibility and a drive to succeed. These qualities are often correlated with higher earnings and a greater ability to build wealth for retirement.

FINANCIAL INDEPENDENCE
Empowering children to become financially independent and self-sufficient individuals has lasting implications for their financial well-being in old age. Encouraging them to find part-time jobs, start small businesses, or pursue entrepreneurial ventures teaches them the importance of generating income and managing it responsibly. This independence reduces the risk of financial dependence on others during retirement.

FINANCIAL ROLE MODELS

Children learn by observing the behavior of their parents and other influential figures in their lives. Modeling positive financial habits and demonstrating responsible money management lays the groundwork for their own financial future. Parents who exemplify prudent spending, saving, and investing practices are more likely to raise children who adopt these behaviors in their later years.

IN A NUTSHELL

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Our children’s money habits have a profound impact on their financial well-being in old age. By providing them with a solid foundation in financial literacy, teaching the value of saving, cultivating responsible credit usage, and fostering a strong work ethic, we empower them to make wise financial decisions throughout their lives. As parents, we have a unique opportunity to shape their future financial security and set them on the path to a comfortable and fulfilling retirement. Let’s make the most of it and ensure our children are well-prepared for their golden years.

Sources: 1, 2, & 3

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6 Tips to Improve Your Credit Score in Singapore

A credit score is a measure of your credit behavior, predicting the likelihood of you paying back loans on time based on information from your credit reports.

In Singapore, credit scores are determined by algorithms that track credit usage. Credit scores are ranked according to the following risk grades: AA is the highest, while BB or CC indicate late repayments or delinquency, and DD or lower indicate defaults. The credit score risk grades are as shown below.

Image Credits: valuechampion.sg

You can easily obtain a credit report from the Credit Bureau of Singapore’s website (CBS) for S$8.00 with prevailing GST. Alternatively, you can get it for free by applying for a new credit card or a loan facility.

Before we dive into ways to improve your credit score and manage your debt, it’s important to understand the significance of having a good credit score. A good credit score in Singapore can provide you with access to larger loans and better interest rates. You see, your credit score is a key factor in determining your loan eligibility for purchases like a flat or a car.

In addition to facilitating loan approvals, a good credit score can also have a significant impact on your career in finance. The Monetary Authority of Singapore (MAS) considers credit checks to be essential for employees and potential hires in financial institutions. Low credit scores can lead to job rejections in the finance industry.

Now, let’s focus on how to improve your credit score. As mentioned above, a good credit score can help you to elevate your career in finance and to boost your eligibility for larger loans. In a place where the cost of living is relatively high, it’s necessary for you to manage your debts and maintain a good credit score to be financially stable. Here are some tips to help you manage your debt and improve your credit score:

#1: MANAGE YOUR DEBT

Be organized. Make a list of all your debts, including your personal loans, credit card balances, and mortgages. Keep track of the interest rates, due dates for each debt, and the minimum payments.

#2: PRIORITIZE HIGH-INTEREST DEBT

Focus on paying off high-interest debt first, such as credit card debt. Prioritizing debt can affect how quickly you can become debt-free. Focusing on high-interest debt will save you more money and allow you to redirect your funds to other financial goals, while following the timeline you set.

#3: AVOID LATE PAYMENTS

Can you imagine how continuously paying for late fees can affect your motivation levels to pay off your debt? By the time you receive your third delinquent payment letter, your credit score would already have dropped, regardless of whether the bank waives your late payment fee. Late payments can hurt your credit score, so ensure that you pay your bills on time.

Set up virtual reminders to help you stay on track. Or ask your financial institution how you can set up automatic payments.

#4: KEEP YOUR CREDIT UTILIZATION LOW

Your credit utilization ratio is the amount of credit you’ve used compared to your credit limit. Maintaining low credit utilization can improve your credit score. If possible, try to use no more than 30% of your available credit.

#5: MONITOR YOUR CREDIT REPORT

Check your credit report regularly to ensure that all the information is accurate. Get your credit report from the Credit Bureau of Singapore. If you find any errors, do not be afraid to raise them.

#6: WORK WITH YOUR BANK

Do not avoid calls or letters from your bank, its debt collectors, and lawyers. Hanging up the call can affect your opportunity to find better ways to pay off your debt. Remain cooperative and reachable. If you are cooperative, your bank is more likely to help you restructure your payment schedule.

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In conclusion, managing your debt and improving your credit score in Singapore requires good financial habits and discipline. By following these six tips, you can upgrade your financial situation and achieve your financial goals in a realistic timeline.

Sources:1,2, & 3

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Benefits & Drawbacks of Using Cash Versus Credit Cards in Singapore

KEY HIGHLIGHTS
a. Paying with cash can encourage mindful spending, as it lacks the convenience that credit cards have.
b. Credit cards have security features and a rewards program, which cash does not have.
c. Interest charges and late payment fees can pile up if you don’t pay off your credit card balance on time.

With the easing of travel restrictions, you are hearing more family and friends discuss their latest holiday plans. Some may even brag about the “free upgrades” they received on flights and hotels by using their credit cards’ miles and accumulated points.

If you are feeling tempted to get a credit card to reap its benefits when you travel, remember to do your own due diligence, and understand the pros and cons of using credit cards versus cash. Both credit cards and cash are widely accepted as payment methods in Singapore. It is imperative that you weigh your options and consider your spending habits, before deciding.

BENEFITS OF USING CREDIT CARDS

#1: UNDENIABLE CONVENIENCE

Credit cards allow you to make purchases without carrying cash, which can be more convenient when you need to make large purchases. You do not need to worry about queues at the ATM, or whether you have enough cash in your wallet. Simply swipe the card anytime and anywhere.

#2: REWARDS AND PROMOTIONS

Many credit cards offer promotions and rewards such as cashback, discounts, and points. You can earn rewards by swiping your card for everyday purchases, which can help you save money in the long run. If you play your cards right, you could be one of those people who fly for “free” due to their air miles redemptions. Imagine boarding the plane and redeeming the staycation of your dreams, without any additional spending on top of your usual expenses!

#3: SECURITY FEATURES

Credit cards come with fraud protection features such as receiving a notification for each transaction. This means that if your card is stolen or used illegally, you won’t be liable for charges. Call the credit card issuer immediately to inform them of any unauthorized transaction. Moreover, you can cancel a credit card if it is lost or stolen.

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In contrast, cash does not give consumer protection against fraud and theft. In the unfortunate event that your wallet is stolen, all the cash inside would certainly be gone.

BENEFITS OF USING CASH

#1: NO FEES

While having a credit card does make purchases in foreign currencies seamless, they tend to come with relatively high foreign exchange fees and unfavorable foreign exchange rates. When you use cash, you do not have to fret about paying fees or interest. Furthermore, some retailers offer devices that are cheaper when purchased in cash.

#2: SPENDING CONTROL

At one point or another, you have probably gone down the rabbit hole of splurging on an item that costs more than your budget. When this happens, sticking to your available cash will be your best bet to stay within your means. Using cash can enable you to track your spending and avoid overspending. With a limited amount of cash in your wallet, you are more likely to think twice before making a purchase.

#3: WIDELY ACCEPTED

While credit cards are widely accepted in Singapore, there are still some places where you can only pay with cash. Small local businesses, hawker centres, or street vendors may opt for cash transactions.

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The choice between credit cards and cash comes down to your financial situation and personal preference. If you value convenience, rewards, and security, a credit card may be a better choice. However, if you prefer mindful spending and avoiding fees and hidden charges, then cash may be the way to go.

Sources:1,2, & 3

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