Good Credit Card habits | Follow the Credit Card Rules in Singapore

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You must not make these credit card mistakes. While mistakes do happen from time to time, you can follow these good credit card habits in Singapore to stay away from penalties and bad debts. 

Good Credit Card habits in Singapore

Determine your spending habits

To develop strong usage habits, one must first self-reflect and identify their spending pattern. Is it spontaneous and impulsive shopping? Is it a lot of small purchases? Is it difficult to keep track of your spending? Is it being forgetful to pay bills? There are numerous factors to consider when determining one’s spending habits. After that, these spending patterns become habits — for better or worse.

Related: Get the Best Credit Cards in Singapore, here 

Keep the utilization ratio low

The utilization ratio is the percentage of your credit card balance that is actively used. Each month, you should strive for a lower utilization ratio. The higher the percentage, the more difficult it is to repay debts on time. Late payments will accrue interest and harm your credit score in the long run.
Maintaining a 30% utilization ratio each month is a good rule of thumb to follow.

Spend only what you can afford

Having said that, everyone’s definition of mindful spending is different. It is entirely up to you whether you prefer to save or spend freely. Just make sure you stay within your financial constraints. This can be accomplished by tracking your weekly spending either holistically or categorically. Separating needs from wants is a great tool for budgeting if you haven’t already. Needs are non-negotiable expenses, whereas wants are variable expenses.

Get acquainted with credit card fees

When it comes to credit card fees, there are several factors to consider:

• Annual charges
• Fees for balance transfers
• Late payment penalties
• Fees for international transactions
• Fees for cash advances
• Rates of interest and grace periods

Unless your credit card company offers lifetime annual fee waivers, you’ll most likely have to pay annual fees every year. Credit cards typically offer complimentary fee waivers during the first year or if you meet certain spending thresholds. Otherwise, expect to pay a non-refundable fee each year.

Increase your credit score

Another credit card fact that many people overlook is its ability to affect your credit score. A credit score is an indicator of a person’s risk as a credit applicant, referring to the likelihood of repaying debts on time or going into default.

Pay your balances on time and in full

You should aim to pay off your credit card bills in full and on time each month as a responsible cardholder. This prevents your balance from accruing interest, which is the main reason why bills pile up so quickly. However, if you are unable to cover the entire bill for that month, make the minimum payment. Basically, pay whatever you can first to reduce the interest-bearing balance.

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