When applying for a new credit card, it is advised not do so without considering the circumstances around you. Here are the best scenarios in which to apply for a spanking new credit card with success.
Get it while you are employed
During the application process, the banks will request for proof of employment as well as your yearly income. This is a requirement under Singapore Law in the Banking Act, where the minimum income requirement for any credit card holder is a minimum of $30,000 for those below 55 years of age. As for those above 55 years old, the minimum income requirement drops to $15,000. It thus goes without saying that the best time to get a credit card is while you are still fully employed and meet the minimum requirements to get one.
When there is a great sign-on bonus or promotion
There is a whole plethora of cards in the market today and it can get confusing since the benefits that most cards offer are somewhat similar. Credit card issuers are fully aware of this situation and have begun promoting their cards with promotional deals. You can, for example, get cash rebates or free merchandise upon signing up for a bank’s credit cards. It can be said that consumers are at liberty to choose here. If you need a new luggage, then signing up with the issuer that is giving out one would make sense. However, it is first and foremost important for you to research on the credit card benefits and drawbacks before applying.
After you’ve closed your mortgage
Due to the housing economy bust in 2008, banks and lenders have become acutely sensitive to credit especially in respect to mortgage applications. Potential homeowners are advised to apply for credit cards after they’ve closed their mortgage as banks usually do not see credit card application before mortgage closing very favourably. Credit cards are known to affect one’s credit ratings somewhat negatively, especially when there is a record of inability to repay on time. So hold on to your horses and wait until your mortgage is closed and settled before going for that credit card.
Before getting a loan for a big-ticket purchase
If you’re thinking of purchasing a car or renovating your home and would like to apply for a loan to finance it, ensure that you apply for your credit card first. Any loans for big buys will be noted by the credit card issuer through your credit rating, where they will assess how you have been paying back a loan. Although some may think that punctually repaying the instalments on a big purchase loan will help improve their credit rating, the final decision is seemingly arbitrary and dependent on whether the bank feels that they could earn some income through issuing the credit card to you.
After thorough research and comparison
When all is said and done, it is important to take time to do some research on the different credit cards available in your area and to narrow down to the card with which will benefit you the most. This means considering all factors such as the card’s annual fee charge (if applicable) and if there is waiver possibility, the credit limit amount and credit interest rates, if the benefits or perks are suited to your purchase habits or lifestyle, whether there are limitations with the credit card and if you meet the minimum requirements.
As can be seen, credit rating plays a very crucial role in application success. As such, the best time to apply is when your credit rating is in good shape. Keep to the situations mentioned above and you could be utilising your credit card in no time.
Written by Claudia Li.
About the Writer: A 90s kid, Claudia is always on the lookout for the best credit cards to supplement her lifestyle. She isn’t afraid of credit card salesmen who approach in public for a chat, and constantly works out the best ways to save on any transaction with her arsenal of cards. Previously in the marketing industry, she now writes on various topics including personal finance, business marketing and other interests.
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