Credit and debit cards come with a lot of fine prints, which makes everything more complicated for cardholders and card applicants. To better understand these matters, as well as the unspoken rules of these policies, we answer five of the most common credit and debit card questions.
- Is it advisable to own more than one credit card?
While there are advantages with having more than one credit card, like having a back-up card in case the other fails for some reason, owning more could also mean that you’ll be paying more than one annual fee. If your income isn’t enough to sustain two credit cards, you’re better off having just one.
- When is it better to use cash than credit card?
According to Singapore financial experts, there are three instances when using credit card is better than using cash. First is when carrying large amount of money isn’t safe, second is when the cash and the card prices are the same, and third is when you can earn from the credited amount. However, experts caution that only responsible spenders are advisable to use credit cards; cash is generally better since it’s easier to keep track of how much you spent and how much you have left.
- When is it better to get a loan than to use a credit card?
A credit card and a loan are both credit facilities. Both are tools for borrowing money, allowing someone to use the money he doesn’t have yet. A loan is more specific. There are car loans, educational loans, housing loans, etc. If you want to reduce the chances of using the money to buy things that have nothing to do with your goal or project, it’s better to apply for a loan. If it’s only for regular expenses, like groceries and fuel, using a credit card is better.
- How to control impulse spending?
A good rule of thumb is to use the two-week rule. This means you delay any purchase for two weeks to have enough time to assess whether or not the item is worth spending. If after two weeks you still want to buy the item, then go ahead. Just make sure you have enough funds to pay for the credit balance. Keep a record of your cash flow so you can easily check whether you can afford the purchase.
- Is it a good idea to have a higher credit card limit? It’s said that it’s good for credit rating?
A good credit card rating means that you have good record of timely payments. Creditors, lenders, and banks gather information to check your credit worthiness. If you have good credit records, you’re likely to get higher credit limit. Your credit rating shows how much risk a lender will take based on your paying capacity. If you always reach your limit, this would take a toll on your credit rating.
Using credit card is a common payment and purchase method in the country. A vast number of Singaporeans use credit cards to take advantage of the promos and earn benefits that they can use in the future. However, credit card is not for everyone. To be a qualified credit card owner, you must understand the responsibility of being one.