Credit cards come with a host of options and benefits – a fantastic cause why credit cards are a popular phenomenon. If you are searching to apply for a credit card anytime soon, here are ten issues you definitely need to have to know. These points will give you a better understanding of how credit cards operate and what you can expect from them.
Annual charges on credit cards
All credit cards provided by banks (at least a significant percentage of them), come with an annual charge. The annual fee mainly varies from 1 card to an additional, even in the case of cards offered by the same bank. Commonly, Premier cards that give superior rewards than typical cards come with a greater annual charge.
When the Major card practically undoubtedly comes with an annual fee, supplementary cards also come with an annual charge in most circumstances. From time to time, the annual charge on the supplementary card is waived for the 1st year or so – this is to keep the card more competitive and in-demand. Certain banks waive the annual charge on the major card as well – for the 1st year, or very first two years, or longer.
Annual rate of interest
All transactions you make making use of your credit card attract a particular rate of interest identified as the annual percentage rate of interest (APR). The interest price is dependent on the bank that’s supplying the card and the form of card. The interest rate for most credit cards is Singapore is among 23% p.a. and 30% p.a.
Banks enable for an interest no cost period of about 21 days from the release of the statement (again, this depends on the bank and the sort of card) and don’t charge an interest if the amount is repaid in full within this interest absolutely free window. If the amount is not paid ahead of the finish of the interest totally 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 These cash advances carry a handling charge of about five%-6% of the withdrawn amount, besides interest charges that fall in the variety among 23% and 28% p.a. Interest on money advances is computed on a everyday basis at a compounding price till the amount is repaid in complete. Cash advances are commonly a risky phenomenon, mainly thinking about the high interest charges. So if you withdraw funds employing your credit card, it is advisable that you repay the amount in full at the earliest.
Minimum month-to-month payments
As a credit card customer, you are needed to spend a minimum quantity each and every month – or the whole quantity if that’s attainable – amounting to three% of the total monthly 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 involve pending minimum payments from preceding months, late payment charges, cash advance charges, and overlimit costs, if they hold applicable.
Late payment charges
If the minimum amount isn’t paid by the payment due date, banks levy a certain charge, generally referred to as the late payment charge. The late payment charge for credit cards in Singapore can be anywhere in the range among S$40 and S$80, depending on the bank offering the card.
Overlimit charges hold applicable and are levied by the bank if the allocated credit limit is exceeded. Overlimit fees can range involving S$40 and S$60 for credit cards in Singapore.
Cashbacks and reward points
An aspect that makes credit-cards a fairly thrilling 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 allow you to earn reward points on groceries, though some other let you earn cashbacks or reward points on air ticket bookings, retail purchases, etc. Cashbacks and reward points are characteristics that are precise to certain credit cards and the extent of advantages depends on the type of card and the bank supplying the particular card. Reward points earned on purchases can be converted into exciting vouchers, discounts and desirable buying/retail obtain/online deals from the card’s rewards catalogue.
Specific credit cards allow you to transfer your entire credit card balance to that particular credit card account, enabling you to consolidate your debt. Balance transfer credit cards come with an interest totally free period of 6 months – 1 year, depending on the card you have applied for. In the case of balance transfer cards, banks charge a processing fee and may well also charge an interest (unlikely in a majority of instances). Just after the interest cost-free period (6 months – 1 year based on the card), regular interest charges on the card are applicable for transactions and cash advances.
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Particular credit cards (mainly premium credit cards) provided by some banks in Singapore let 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 larger annual fee owing to their premium nature. As a consumer of a premium credit card, you can accumulate sufficient air mile points to totally offset your subsequent getaway!