Credit Cards

What is a credit card?

A credit card is a form of borrowing. It may be a convenient mode of payment as it allows you to buy goods and services without using cash, but it is not intended to be a long-term credit facility.

How do you use a credit card?

You can use your card in any retail outlet that accepts your brand of credit card (there are different credit card associations). When you buy something with a credit card, you sign a sales slip. The merchant keeps a copy and gives you another copy for your record. The merchant then sends a record of the transaction to the card issuer to claim the transaction amount. Your card issuer pays the merchant the transaction amount less a small administration fee. It then sends you a credit card statement which sets out your purchases for the past month, and asks for payment by a certain date. Full or partial settlement of the accumulated amount may be made, although partial settlement will attract interest (finance) charges.

You can also use your card to shop online. Make sure you only shop at online stores that you know and trust. Always print the invoice slip or confirmation page after buying something online and check the amount billed against your monthly statement.

How do you apply for a credit card?

You can apply for a credit card from a card issuer. If your application is accepted, you will be issued a card with a credit limit.

The card issuer will usually assess your repayment ability before deciding whether to accept your application and what credit limit to be set. It may check your credit report to do this. Read more on Credit Report.

What is my credit limit?

The minimum annual income requirement for credit cards is set at $30,000. The maximum credit limit, including any other unsecured credit facilities that a financial institution can give to such individuals is limited to four times his monthly income. There are exceptions to these requirements. Please refer to table below:

Annual income Maximum unsecured credit limit How maximum unsecured credit limit applies
$30,000 and above 4 x monthly income Combined limit applies to all credit granted on credit cards and other unsecured credit facilities with the bank
Above 55 years old and annual income of at least $15,000
  • 2 x monthly income (if annual income is less than $30,000)
  • 4 x monthly income (if annual income is $30,000 and above)
Combined limit applies to all credit granted on credit cards and other unsecured credit facilities with the bank
Does not meet minimum income requirements above May be eligible for a micro-credit card with maximum unsecured credit limit of $500
$120,000 and above Card issuer may rely on own credit assessment and set maximum credit limit.
Net personal assets more than $2,000,000

Can you apply for a supplementary card?

A main (or principal) card member can apply for a supplementary card for someone who does not meet the minimum income criteria. However, the supplementary cardholder should generally be at least 18 years old. The main cardholder will be responsible for all debts incurred by the supplementary card-holder.

What are the key features of a credit card?

Here are some common features of credit cards:

A form of borrowing (amount due)

A credit card is a form of borrowing and allows you to borrow up to the credit limit set for your card. The outstanding balance on your credit card (usually amounts you have charged to your credit card) represents what you owe. You can pay the bill in full, make a partial payment or pay the minimum sum.

Interest will be charged on the outstanding balance if you choose to pay only the minimum sum or part of the amount due stated in your monthly statement. Interest will also be payable on any new item charged to the card from the moment you make a purchase.

Grace period or free credit period

Usually, there is a grace period of between 20-25 days for you to pay the outstanding balance on your credit card in full, without incurring interest. 

Minimum sum

If you cannot pay the bill in full, you should at least pay the minimum sum by the payment due date and roll over the balance. The minimum amount is usually 3 - 5% of the outstanding balance or a specified amount, for example, $50, whichever is higher. 

You will not incur a late payment fee if you pay the minimum amount. But if you pay the minimum sum and roll over the balance, you will be charged interest on your current purchases as well as on all subsequent purchases. Interest will be calculated on the outstanding balance from either the date each transaction took place, or the statement date. This depends on the card issuer.

What facilities does my credit card have?

Balance transfer facility

This enables you to transfer your outstanding balances with other card issuers to your credit card at a lower interest rate for a limited time period. The periods usually range from 6-12 months. After this, the interest rate will revert to the prevailing interest rate (usually 24% per annum).

Other terms and conditions may apply. For example, the lower interest rate may only apply to the transferred balances and not to amounts charged to your card, which could be charged at a higher interest rate. Depending on the card issuer, new amounts charged to the cards may not enjoy the grace period or free credit period once the balance transfer facility on cards is used. It is important to pay off outstanding debts before adding on new debt at higher interest rates.

Cash advance facility

The cash advance facility allows you to get extra cash, drawing down from the credit limit available on your credit card.

  • A fee of 3-6% of the cash advance (subject to a minimum dollar amount) may be imposed.
  • Interest is usually charged daily at 2% per month or 24% per annum from the date of the cash advance until full repayment is made. If full repayment is made after the billing statement date, interest is charged between the billing statement date and repayment date.

Zero % interest instalment plan (IPP)

Credit card issuers often tie up with different merchants to offer interest-free instalment plans. Such schemes may allow you to pay the same price as someone who pays the whole sum upfront in cash.

Here are some things to be aware of:

  • You have to pay the monthly instalments on time or the standard interest charge (usually 24% per annum) will apply.
  • You may not be able to cancel the card until full repayment is made on your instalment plan.
  • If you opt to pay the minimum sum (assuming that it is less than the monthly instalment amount), you will have to pay the usual interest rate on the outstanding balance, in addition to any applicable late payment charges.
  • Refund or exchange of products and services may not be allowed once the instalment plan is approved by the bank.
  • You may have to pay a penalty fee should you later choose to opt out of the monthly instalment plan and make full repayment.
  • You may have to continue paying the monthly instalments even if the merchant ceases business operations and is unable to continue providing the goods or services you purchased.

Free gifts and reward schemes

Credit card issuers may offer free gifts and bonus points when you chalk up spending on your credit card. Certain terms and conditions may apply. For example, you may not be able to cancel your card within the first year after claiming a free gift.

Compare how the bonus points are calculated as different card issuers have different reward schemes.

Your monthly statement

The card issuer will send you a monthly statement detailing all the purchases you have made with the card during the month. All transactions recorded between the statement date and the last statement date will appear on this statement.

Check your statement carefully to help you keep track of how much you owe. Inform the card issuer promptly if there are transactions listed which you do not recognise, or if anything is unclear.

The payment due date is the date by which you should pay your credit card bill so that you do not incur late payment charges. You can pay the bill in full, make a partial payment or pay the minimum sum. Read here for a general illustration of the statement.

How can you pay your credit card bills?

You can pay by cheque, Giro, ATM, Phone Banking, AXS Stations, cash via bank branches or online.


Read on to learn what are the things to watch out for when using credit card.