5 Things To Note When Getting Your First Credit Card

If you are earning a steady income and are over the age of 21, you might want to start thinking about getting a credit card. Not only is it incredibly convenient to buy things when you are running low on cash, but it also helps you build a credit history which is essential for future financial milestones.

1. Understand the Eligibility Criteria

Before applying, ensure you meet the minimum income requirements set by the banks. Most entry-level cards require an annual income of at least $30,000 for Singaporeans and permanent residents.

2. Mind the Annual Fees

Many credit cards charge an annual fee. However, for your first card, it is common to find "First Year Fee Waiver" promotions. Always check if a waiver is available or if you can request one after a year of good usage.

3. Interest Rates and Grace Periods

The interest charged on credit card debt is very high (often ~25% per annum). The secret to using a credit card safely is to pay off your full statement balance every single month within the grace period to avoid interest entirely.

4. Rewards, Cash Back, or Points?

Decide what matters most to you. If you spend on groceries and fuel, a cashback card might be better. If you love traveling, perhaps a travel-focused card that earns miles would be more beneficial.

5. Responsible Usage

A credit card is not free money. Always view your credit limit as a ceiling, not a budget. Keep track of your spending to ensure you never charge more than you can afford to pay back at the end of the month.