Credit cards are a convenient payment mode for consumers, offering them financial flexibility and the opportunity to maximise their spending dollar. They are in effect a kind of short - term personal loan. Other types of payment cards are debit cards, retail cards, and travel and entertainment cards. They are issued by banks, oil companies, telecommunication companies, and travel and entertainment companies. Having these cards reduces the need to carry too much cash around with you, and the trend is for a movement towards a cashless society.

Bank credit cards
Most of the major banks in Singapore issue credit cards in conjunction with Visa, MasterCard or American Express. You need to satisfy a minimum income requirement of S$30,000 per annum to qualify for a basic credit card. There are higher requirements for premium cards. Credit cards are popular for several reasons:
     Annual fee can be waived through the deduction of dollar points accumulated over the year.
     Interest-free credit on new charges for a certain period of time.

Retail cards
Retail cards are issued by retail stores to let you purchase their products on credit. Examples are the SOGO, BP, Mobil and Shell cards. The annual fee for these cards is low and there is no minimum income requirement, so they are easy to obtain. You also enjoy a 3-5% discount and other freebies, such as complimentary gifts in exchange for points accumulated. As with bank credit cards, the retailer charges interest on unpaid balances.

Travel & Entertainment cards
Also known as charge cards, popular travel and entertainment cards include American Express and Diners Club. The cards allow you to defer payment until the end of the month, but do not provide interest-free credit. Unlike credit cards, all bills must be repaid at the end of the month and no rollover is allowed. Unpaid balances are charged at a higher interest rate than for credit cards, to discourage late payment.

Debit cards
Debit cards allow banks to transfer money directly from your bank account to settle payments as soon as they are incurred and the bank receives notice. Debit cards were launched only in the last few years and are being promoted as the alternative to credit cards. The advantages of debit cards:
     You do not incur interest charges since payment is made immediately or within 2-4 days
     There are no income requirements, you only need to have an account with the bank from which payments can be made
     No credit is extended and usage is subject to the available balance in your account.

How do they work?
Grace period: Credit card holders are usually given an interest-free credit period of 20 to 40 days, depending on the issuer. You can therefore earn interest on the cash deposited in your bank during this period, and this translates into a saving on your purchases.
Interest calculations: Interest is calculated on a daily basis after the interest-free credit period. For example, taking an average rate of 24% per annum, a 2% interest is charged on a monthly basis, or 0.065% on a daily basis.
If you choose to rollover the remaining balance for a longer period, the interest charge is compounded over subsequent months.
Minimum payment: Among the four major local banks, the highest minimum monthly payment ranges between 5-10% of the monthly amount owed, or S$50, whichever is higher. You can then choose to revolve the remaining balance.
Default: If you do not pay at least the minimum fee for more than a month, it is considered a default. While most banks have slightly different time frames (e.g. one month or two months) for default considerations, it is important that you pay at least the minimum sum in your monthly statement. Some banks allow for negotiation but others will take legal action straight away.

How do I find the best deal?
When deciding which credit card to apply for, factors to consider include:
Interest rate: This is the interest rate charged on revolving balances. It can accumulate to a substantial amount if you choose to pay only the minimum requirement every month. A comparison should be made between the rates imposed by different card issuing banks to find out which will incur the lowest charges.
Annual fee: Annual fees and fee waivers granted vary between different banks and cards. It is important that you take this into consideration before applying for any credit card. For example, some banks waive the annual fee for a certain period of time, or impose charges for supplementary cards.
Late fees and penalties: For all credit cards, if you do not make minimum payment you will be charged a late fee in addition to the interest incurred. Payment deadline: Most banks are very strict about receiving payment on time. It is important that you remember the three-day cheque clearance time in case of cheque payment.
Extras (purchase protection, loyalty points, etc.): There are extra benefits or services offered by card issuing banks. For example, a purchase protection offer protects your purchase (up to a limit) in the event of theft, loss or damage. To reward you for using their card, many banks also allow you to earn loyalty points which can be used to redeem gifts, travel tickets or fee waivers.

Tax Implications
There are no tax implications for credit cards.