Apr 10

How important is it to compare credit cards before applying for one?

When you are looking to apply for a credit card in Singapore, there are many things that you need to consider, but the most important is to compare all cards in a particular category. You need to compare the cards only in terms of the three main categories: cashback, rewards points and air miles. Once you are aware of the different features and benefits available with different cards, you will be better placed to make a decision.


Here are 3 reasons why comparing credit cards is important

1. You get to see the choices available in the market

Did you know that there are nearly 100 credit cards in the Singapore market? Only when you go online and do your research would you find how big the market is. Only when you know what exactly is out there would you be able to make a wiser decision.

2. You get to know more about each card

Online research, especially on comparison sites such as BankBazaar, will give you more information about the cards that you’re looking at. You will learn not only about the features and benefits of a card, but also about the hidden details such as interest rates and other fees, the conditions that apply to the freebies advertised, restrictions on earning rewards, categories your card may not earn you much on, among other things.

3. You may find a better credit card

The higher the number of choices, the greater the chance of getting a card that is tailored to your needs. You might have decided to go with a popular credit card from the bank where you have an account, but it is possible that another bank has a better or more useful card for you.

Now, let us tell you the various factors that you need to take into consideration when comparing credit cards.


Factors to consider when comparing credit cards

1. Interest Rates

The interest rates appliedto each card is the most important factor when comparing credit cards. In Singapore, the rates can be anywhere between 24% to 29%.

There are introductory rates of interest, different rates applied to different ways you use the card, and rates that vary with the amount of balance on your card. For example, higher interest rates are normally applied to cash advances, and different rates are applied to balance transfers if you shift the balance of your card to a different account. Penal interest rate may be applied if you default on your payments.

However, these rates need to be paid only if you are not making full bill payment every month. There will also be grace periods or interest-free periods from the date of issue of statement. So pick a card with a lower interest rate and a higher grace period, so that you can avoid paying extra money to the bank.

2. Fees

Cards will have several charges such as annual fees, late payment fee, cash advance fee, among others. Many banks waive the annual fee off for a year or two as a joining perk. For example, cards that offer air miles will normally have a higher annual fee, but they canhelp you save more if you travel frequently.

You must compare the fees between different cards and understand what you are receiving in return. Make sure that you’re earning more through miles or cashback from the card than the yearly fee you’re paying.

3. Cashbacks and Rewards

Most credit cards in Singapore offer rewards in the form of cashback or points, which you can redeem at a later date. Once you have made sure that you are getting the best deals on all essentials such as fees, interest rates and grace period, you must subsequently check the extras that you can get in terms of cashback or rewards.

4. Billing Cycle

The billing cycle associated with your card is also quite important when comparing cards, as it will help you determine when you will have to pay interest on your purchases. An extended billing cycle is better as then you are in effect getting an interest-free loan for a longer period of time.

5. Special offers and Expiry Dates

Often you will find credit card issuers enticing users with promotional offers. However, these offers will invariably have an expiry date. Do not forget to check these dates before you get lured into applying for the card. Focus on the benefits on your credit card that you can make use of over a longer period, instead of short-term perks.

There are many cards in Singapore for you to choose from, and if you use the criteria mentioned above to compare the existing cards you are likely to find the one that is most appropriate for you.


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