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Credit card charges! We don’t like them and want to avoid them, and it can get scary if they add up. One of the best things about credit cards is spending first and paying later. Sometimes we’re happy about the trigger or the card swiping whatever we forgot on the fee, and we end up paying more than expected.
So, in this article, we’ll go over annual, transactional, and miscellaneous fees and how you can maximize your savings by avoiding them altogether. We’ll also feature some Singapore-based credit card recommendations.
Having a credit card is a privilege and in some cases it can be seen as a status symbol (especially if you are an AMEX user). Most providers will charge an annual fee for the privilege of using a credit card, similar to a membership program. Some credit cards offer perks and rewards, like free lounges at the airport or specific discounts for certain upscale restaurants and hotels.
Another reason credit cards have annual fees is that credit cards allow you to roll over balances and pay off your purchase over time. However, in most cases, carrying a balance requires you to pay interest charges.
So how do you deal with annual credit card fees, as they tend to be the most expensive fixed cost for this? There are three options: get a credit card with no annual fee, find a credit card with annual fee waivers for appropriate terms, or determine if the benefit you get from using the card rewards; member benefits) is worth the high annual cost. costs.
Since the third option is more subjective, we can provide you with two cards that meet the criteria of the first two options.
CIMB Visa Infinite card
The CIMB Visa Infinite card is a great, no-cost way to earn on all your expenses. While most competitors also charge a fee of over S$170, the CIMB Visa Infinite card is free forever. Competitors’ cards also offer a flat 1.5% cash back, so frequent travelers are much more likely to benefit from the CIMB Visa Infinite card.
What are the additional benefits of the card other than no annual fee? Cardholders can earn 1% unlimited cash back on all spend and 2% on travel expenses (hotels, airlines, travel agencies and more) after a minimum threshold of S$2,000.
OCBC Titanium Card: Miles for Retail Buyers
The OCBC Titanium Rewards Card offers many benefits that can benefit retail shoppers, such as earning 4 miles for every dollar spent at major retail and electronics stores, as well as various retail merchants, online and offline. There is no minimum spend requirement.
Despite the annual fee of S$192.60, cardholders can waive the fee by spending just S$10,000 per year. Competitor cards don’t offer fee waivers, making the OCBC Titanium card the best option for buyers looking for flexibility with no annual fee.
If you want to learn more about credit card alternatives with no annual fee (or waiver), Click here to see a comparison.
Annual Percentage Rate (APR)
The interest rate you have to pay to borrow money on your credit card is the annual percentage rate (APR). For more information on APR, click here.
APRs are a bit more complicated and the accumulation of interest over time can be extremely subtle but problematic when obvious.
You can transfer your balance to a 0% APR credit card to reduce the high APR. Note that some cards will charge a 3-5% balance transfer fee, so choose your credit card wisely when balancing the transfer fee and term for 0% APR.
The first fees we will discuss are credit card processing fees. This processing fee is a reduction that the credit card issuer, a processing network and the merchant’s bank charge to facilitate the transaction between you and the merchant; you have to pay this no matter what, because it depends on the purchase. This does not count as credit card charges which we may reduce.
Some credit cards charge a foreign transaction fee when you purchase an item in a foreign currency. This includes buying an item online with a foreign currency, or even using your card abroad and paying for items billed in a foreign currency. These fees typically represent around 1% to 3% of your expenses. Some travel cards may ignore these fees as part of their unique selling proposition.
Late payment fees
Credit card companies love to punish people who don’t pay their balance on time. Even if your credit card doesn’t have an explicit late fee listed in their terms and conditions, some cards will charge you an APR penalty, usually higher than your card’s current variable APR. This APR penalty can last for months until you have made regular payments on time, or indefinitely.
The APR penalty will make your credit card debt even more expensive, costing you even more than late fees.
To avoid having a late penalty, pay your bills on time. Either through automatic payments or by being aware of your spending through budgeting habits.
Now that you’re more aware of credit card fees and how to manage them, you can optimize your credit card to suit your budget and needs.
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The article originally appeared on ValueChampion.
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