What is the difference between a debit card and a credit card?
Basically, the former only allows you to spend money that you already have. The latter enables you to spend money which you may not presently have.
When you use a debit card, you are instantly ‘withdrawing’ money from your bank account to make payment. If there is insufficient money in your bank account at the point of payment, the transaction will not go through. As such, a debit card ensures that you spend within your means and not end up drowning in a mountain of debt when the bill arrives.
When you use a credit card, the bank is lending you money for the time being. You are responsible for repaying all the money that you have spent using the credit card within the ‘grace period’. If you are unable to repay the full amount on time, interest is payable, which means that you have to pay back interest on top of the amount spent. Additionally, annual fees, late payment fees, foreign transaction fees and balance transfer fees may also be chargeable. Nonetheless, a credit card offers a plethora of benefits which a debit card does not, including air miles, cashback and reward points.
Who should apply for a credit card?
The short answer? Those who are financially prudent. Because a credit card gives us so much credit, the human tendency to indulge in both online and brick and mortar shopping renders us susceptible to overspending. Many a time, you may be happily swiping your way through numerous buys without being informed of the actual amount that you have spent. When you eventually discover at the end of the month that you have blown your budget, it is too late to start scrambling to get refunds for your purchases.
That being said, you may have to ask yourself some questions before applying for a credit card. Are you someone who manages your finances well? Do you have the habit of saving? Or do you live from paycheque to paycheque? Do you repay your debts on time? Or do you have overdue bills? These questions are essential because if you are an extravagant spender, the credit card may have to wait.
Why are you getting a credit card?
People get credit cards for various reasons. Some prefer credit cards to cash because of convenience, some view credit cards as a status symbol, and others simply want to enjoy the attractive sign-up perks. Whatever your reason may be, know that getting a credit card grants you the opportunity to turn that coloured piece of plastic into a great financial tool.
Which credit card(s) should you get?
The market offers a myriad of credit cards – air miles credit cards, cash back credit cards, reward points credit cards, rebate credit cards, the list goes on. The question that lingers in everyone’s mind is: Which is the best credit card in Singapore? This is a common query because ultimately, you have to be prudent in choosing which cards you are going to carry around in your wallet. Yet, getting this step right is not an easy feat.
Firstly, you have to have a good understanding of your spending habits. Does the bulk of your salary go to shopping, food or travel? Secondly, you have to figure out where your interests lie. Do you rejoice in achieving savings through cashback? Or are you keen on accumulating air miles in exchange for a business class ticket? Maybe both? Subsequently, you must put in time and effort to do your research. Compare the credit cards and ascertain which cards in the different categories suit you best.
How to apply for your first credit card?
Simply head online to fill up the bank’s application form and submit any necessary documents. Following the bank’s approval, your credit card will be delivered to you. Activate the card, and you are all ready to embark on an exciting financial journey.
Conclusion
Getting your first credit card is a significant milestone in life. Hopefully, this guide has served you well. If you have any further queries and would like to be furnished with more information with regard to applying for your first credit card, feel free to contact us for a chat.
