As of 2021, 73% of Singaporeans own at least one credit card. Only 10% owns six or more. Their attitudes towards credit cards are interesting, though. While most of them think it makes financial sense to own a credit card, they also think it promotes excessive spending. Indeed, when you can pay for your purchases later, it’s easy to be tempted to buy what you can’t afford.
Fortunately, Singaporeans are disciplined on credit card use. 88% pay off their outstanding balances on time. Only 9% pay them off partially, and a meager 3% pay the minimum amount. Due to this discipline, credit card debt only made up just over 4% of the country’s consumer loans in 2016.
Why Are Singaporeans So Disciplined?
If you want to round up people who are dealing with a mountain of debt, the last place you’ll find them in is Singapore. Their society is good at managing money because they are financially literate. Singapore has the highest financial literacy rates in Southeast Asia.
Interestingly, Singaporeans themselves don’t realize how financially literate they are. When asked how they perceive their own financial literacy, Singaporean women rated themselves 59%, but their actual rate was 81%. On the other hand, Males perceived themselves to be 70% financially literate, but it was actually 83%.
There’s a small difference between male and female financial literacy because Singaporean men are more financially savvy than their female counterparts. Also, Singaporean women tend to have less confidence in their financials, explaining why they’re more conservative regarding investing.
Still, both genders are adept at paying off their debts and saving money. Singaporean men were found to save for retirement, while the women prioritized saving for education.
How Singaporeans Use their Credit Card
Singaporeans’ eagerness to save doesn’t stop them from using their credit cards. 16% of them use it daily, 37% a few times a week, and 20% every week. The ones who use it every other week, monthly, and rarely are only 8%, 10%, and 9%, respectively.
Most of their credit goes to travel tickets (81%), accommodation (76%), and food and beverages (75%). Recently, many of them used their credit cards for online shopping; 68% of e-commerce transactions this year took place via credit card.
If you’re wondering whether using your credit for other purchases, like electronics, clothing, or services, is wise, it’s actually advisable to pay with credit for those transactions. But of course, you have to know your limits.
Owning a credit card isn’t an excuse to buy what you can’t afford. Some credit transactions include an interest, after all. Some credit card companies also charge an annual fee. And if you failed to pay your balances on time, they may charge you with a late payment fee as well, which can be as high as SG$100.
Using Your Credit Card Wisely
The fees associated with credit cards make owning them a little intimidating. But in truth, you can enjoy many perks from shopping using credit. Rebates and rewards are the most common benefit you can get. Three types of credit cards determine what you’ll be eligible for: cashback card, miles card, or rewards card. A cashback card will deposit your credit cash directly to your account. The other two are accumulated until they’re enough to redeem flights or earn you gifts, respectively.
The purchases that can give you the best incentives are:
- Electronics and appliances: can offer price protection, extended warranty, and additional security and insurance
- Event tickets: if your credit card provider partners with an event promoter, you can get advanced access to tickets for big events, as well as discounts or even the opportunity to go to exclusive events
- Travel arrangements: Singaporeans love using their credit card for travel arrangements because of the security it gives them. Some cards offer coverage for lost luggage or travel-related medical emergencies
- Car rentals: if you’re a foreigner traveling to Singapore for the first time, using your credit card to pay for a car rental service will be more convenient than paying cash
- Overseas purchases: shopping abroad has never been more secure because of credit cards
- Online shopping: your credit card can offer you protection if you’d buy from an unfamiliar online retailer
- Cellphone bills: if you lose your phone, your credit card provider can offer to cover the cost of your lost, damaged, or stolen phone
Basically, you can use your credit card for just about anything. But you shouldn’t use up your credit limit because that will incur bad debt. Losing control of your credit card spending will harm your credit. If your provider deems you a high-risk borrower, they may revoke your rights to a credit card. So think like a financially literate Singaporean, and your credit will never feel like debt.