You don’t have to fear the credit card as long as you follow 1 simple rule
Credit cards are financial tools and whether they benefit you or trap you in debt depends on how you use them.

In today’s cashless world, credit cards are probably one of the best financial tools to give us the most bang for our buck – if we learn how to use them right. (Illustration: CNA/Samuel Woo)
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Last year, my husband and I flew from Singapore to New York in business class with Singapore Airlines for the first time.
Some of our friends assumed that we shelled out a bomb for it, but the truth is we paid nothing (apart from about S$100 for airport taxes). And it is all thanks to our credit cards.
In today’s cashless world, credit cards are probably one of the best financial tools to give us the most bang for our buck – if we learn how to use them right – and Singaporeans are catching on to this.
In a 2023 survey by GlobalData, more than 70 per cent of Singapore respondents reported using a contactless card for their payments. In this group, credit and charge cards accounted for 65.6 per cent of the overall card payment value for the year. Debit cards made up the remaining 34.4 per cent.
There still seems to be a good deal of fear towards credit cards, especially given recent news about rising credit card debt in Singapore, where credit card rollover balances hit a record high of S$7.9 billion in the third quarter of 2024, the Monetary Authority of Singapore said. Even so, only a small minority of Singaporeans default on their credit card payments, it reported.
The authority's Jan 9 notice on its website about curbing credit card debt is a salient reminder to all of us that we should not be living on borrowed money, especially as more Singaporeans grow comfortable with rising debt levels partly thanks to the advent of “buy now, pay later”.
To be safe, some may abstain from credit cards altogether or avoid using one even if they have it.
Now, there’s nothing wrong with this, but I can’t help but wonder if those who choose to go without these cards know just how much they are missing.
GET MORE OUT OF YOUR EVERYDAY SPENDING
When you pay for your groceries at the supermarket with cash, PayNow or your debit card, you typically get no perks.
If you were to pay with a credit card instead, you could get up to 18 per cent cash rebates or 10 air miles for each dollar spent. My S$600 grocery bill each month can now cost just S$492, or can be used to get me up to 72,000 miles in a year.
These miles can be used to redeem free flights or free hotel stays, which can significantly reduce the costs of your holiday travels. Our recent business class flight to the United States is an example of that – an option we would never have forked out for, given our lean budgets.
Signing up for a new credit card often also allows you to benefit from generous welcome offers that might include a bevy of luxury perks or even cash vouchers. Over the years, we’ve also received free iPads, travel luggages and even a few thousand dollars for simply signing up and using the right credit cards.
The best part? These expenses were things we were already going to spend on, with or without the accompanying credit card offers and perks.
Some credit cards partner with selected merchants to offer further discounts on your bill. These might also include special bundles, promotional rates or even priority access to certain events.
People holding cards from the United Overseas Bank will certainly remember how they enjoyed presale access to Taylor Swift’s concerts in Singapore last year before ticket sales were opened to the general public.
PROTECTION FROM FRAUDULENT TRANSACTIONS
Beyond lapping up rewards and privileges, perhaps the biggest advantage of using a credit card is that it can protect you from losing all your savings overnight.
You may have come across a fraudulent transaction or two in your bank statement before. This seems to occur more frequently these days, thanks to a rise in scams and hacking technologies.
When this happens with a credit card, you can call the bank to dispute the transaction or even do it through its mobile application. The bank will then investigate further with the merchant and reverse the charge if the transaction was indeed not made or authorised by you.
If this were to happen with your debit card that is linked to your savings account, your entire account balance could be drained before you even realise it. The odds of getting your money back – especially if it has already been transferred overseas – are low.
Keep in mind that it is not enough to simply be careful with your card details these days. Scammers have become adept at using various technologies and tools to generate random card numbers and codes to see what they may get with some luck.
Unlike a debit card, most credit cards come with credit limits that put a cap on how much of your money a scammer will be able to get away with in the worst-case scenario.

AVOID FALLING INTO THE CREDIT CARD DEBT TRAP
Of course, it doesn’t mean that credit cards don’t come with risks. But there is no need to fear them as long as you follow one cardinal rule: Always pay off your monthly balance. In full and on time.
At 26.9 per cent to 30.9 per cent per annum, credit card interest rates are so atrociously high that they can easily snowball into a mountain of debt if we’re not careful. Even taking a personal loan would cost much less.
As long as you pay off your balance statement in full each month, you won’t have to worry about hefty interest charges or late payment fees. You can reap all the benefits as a credit card user without having to pay for the pitfalls.
You can also create systems to help you remember, such as setting up monthly calendar reminders to check and pay off your bill, or automating your card payments with GIRO.
To avoid overspending, you may set yourself a credit limit. Your card will automatically decline all other transactions once you’ve hit your preset limit for the month.
Many credit cards come with annual fees, but most offer fee waivers, especially if you’ve been actively using the card and have met certain spending thresholds. You may need to call your bank’s customer service helpline to request a fee waiver, but it’s well worth the effort.
USING FINANCIAL TOOLS WISELY
Financial tools such as credit cards can cut both ways – but much like any other tool, the outcome of using them is largely dependent on the wielder.
Use them wisely and responsibly and you will be better off for it. On the other hand, carelessness, negligence or over-reliance on them can quickly result in bad habits and undesirable consequences.
Whatever the case, spending money is an unavoidable necessity for us all. And using only cash or debit for our expenses certainly won’t give us access to substantial savings through rewards, cashback and exclusive deals.
So are credit cards a boon for our financial health or a bane not worth the risks?
The answer: Both. Whichever one it ends up being is ultimately up to us.
Dawn Cher, also known as SG Budget Babe, has been running a popular blog on personal finance for the last 10 years.