A credit card is an outstanding financial product that you can take out at any point and pay off for different things – things that are as small as groceries to bigger purchases like a home theater. If you don’t have a credit card as of yet, it is something that you must consider getting soon. In case, you are already planning on applying for your first or a secondary credit card, here are some tips that you must keep in your mind.
1. Know Your Needs
Several banks and credit card companies offer attractive deals and discounts to get more and more customers. But before you consider these offers, make sure you know what you are looking for. Spend some time considering what you want, need and can afford with your next credit card.
For instance, if it’s the first credit card you’re applying for, you might want to apply for a student card to ensure you meet the eligibility requirements and that the interest rates are low and affordable. Once you know why you want a credit card and how frequently you will use it in the future, start looking for the best-suited options.
2. Compare Your Options
There are many types of credit cards that suit different types of cardholders. Compare the following things of all the credit card providers you are considering:
- Interest rates on purchases, cash advances and balance transfer
- Annual fees
- Interest-free periods
- Rewards programs including the partnered program, earn rates and how you can earn and redeem points
- Complimentary insurances including travel insurance, purchase protection and extended warranty cover
- Additional cardholders and whether they come with an additional fee
- Extra benefits such as concierge services and airline lounge pass that’ll help you offset the costs of the card
- The reputation of providers based on online reviews and testimonials
- The kind of customer service provided
Once you compare these things, you will get the top best-suited providers that you can then consider.
3. Consider Your Eligibility
In case, you are planning to buy your first credit card, your credit score will act as a major deciding factor. In case, this isn’t your first card, you already know it. Therefore, before applying for a new credit card, you must first find out your credit score. In case, your credit score is good enough to be eligible for buying a credit card, then that’s great; you can purchase immediately. But if you find out that your credit score is low, you should first work on it before purchasing the card.
Do everything that will better your credit score such as pay all the outstanding bills and be careful of all the utility bill cycles for a couple of months. The score won’t instantly shoot up; you’ll have to be patient and do everything good for at least two months. Keep checking the score at equal intervals. Finally, purchase the card at the right time.
4. Various Potential Fees
There are a lot of potential credit card fees that you may need to pay, but many of them are easily avoided.
Annual fees are charged on high-value rewards cards, as well as on cards for higher-risk consumers with lower credit scores.
Balance transfer fee:
This is charged when you move a balance from one card to another, typically 3% to 4%.
Foreign transaction fee:
It is charged whenever you make a purchase overseas.
Late payment fee:
This is charged if you don’t pay at least the minimum payment by the due date on your credit card statement.
This fee is charged in case your balance exceeds your credit limit. You have to opt into this fee, per the Credit Card Act of 2009.
Before purchasing a new credit card, make sure you find out all the fees charged by different card providers. Compare those fees, estimate your long-term expenses, and only then make a smart purchase.
5. Balance Computation Method
Do you anticipate carrying a balance from month to month? In case, you’re going to carry a balance, then you need to consider how the finance charge is calculated. The most common method is the average daily balance, which means that the daily balances are added together and then divided by the number of days in the billing cycle. Stay away from credit cards that compute the balance using two billing cycles; this winds up costing you more money in financing fees. There are plenty of cards that don’t use it.
Some credit cards that are currently very popular in the Singaporean market include Standard Chartered Unlimited Credit Card, Citibank Cash Back Visa Card, HSBC Visa Infinite Card, UOB PRVI Miles Visa Card, American Express Singapore Airlines Krisflyer Credit Card, UOB YOLO Credit Card, and American Express The Platinum Card.
Make sure you give importance to each of this tip and spend enough time comparing your options. Only then you will be able to buy a credit card that suits your needs and is also affordable for you.
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