Availing a credit card is considered to be a good financial option to take. It helps you shop around more conveniently, not to mention you do not need to carry around with you hefty amounts of cash.
In availing a card, however, always make sure to conduct a personal research of your own. Compare features, costs, incentives, and possible drawbacks from one bank to another before you settle on a single credit card. Keep in mind that the search for the ‘right’ card requires time and effort on your part.
Here are some of the things you must look out for when picking a credit card for the first time:
Annual fee – A number of credit cards in Singapore often charge an annual fee of around 190 SGD, while others don’t. This fee is often waived during the first year but later on charged to you after a year or so of using the card. There are also cases where banks waive annual fees (for example, if you’ve charged or hit a certain amount for the year) so for clarification purposes, it is encouraged to ask your bank about it.
Interest rate – The interest rate is generally the percentage of the interest you’ve charged on the balance on your card. This also includes cash advances, so it is usually two different rates. It can be either fixed or variable/floating. Fixed is sometimes higher, but it allows you to know what to expect for the year. Variable rate is often lower, as it is based on an interest rate that may swing up or down.
Introductory rate – In order to attract more card users, banks often offer a low introductory rate that may later grow into a higher fixed or variable rate. Before you sign up for one particular card, make sure that you are aware of how long the introductory rate is (this is usually around three to nine months). If you happen to send a late payment, your card’s introductory rate is often cancelled.
Finance charge – This is the actual amount you have to pay when carrying a current balance. This charge often includes interest costs and other various transaction fees. If you want to be financially aware, you might as well learn how the number is calculated. There are several methods to do so you can find on the internet, the average daily balance method being the most common.
Grace period – This is a time period for you to pay off all your current balance minus the finance charge. Most cards typically offer this period, which is usually around 25 to 30 days. This period starts from the date which is printed on bill, not the date you made the purchase.