When shopping for a credit card in Singapore, you will come across two broad categories: credit cards with annual fees and credit cards without annual fees (or that have easy fee waivers). In this article, we will discuss whether or not annual fee credit cards are worth it in Singapore and some of the alternatives available.
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What Are Annual Fee Credit Cards?
Annual fee credit cards are credit cards that charge you a fee, once a year, for using the card. In return, they tend to offer more and better perks than cards that do not charge an annual fee (or that have relatively easy methods for waiving the fee).
An example of an annual fee credit card is the UOB One Credit Card. It charges an annual fee of S$196.20, which is only waived for the first year.
When Are Annual Fee Credit Cards Worth It?
Choosing a credit card with an annual fee can pay off. This can happen when the benefits you get from using the card outweigh the annual cost of keeping it. In general, the higher the credit card’s annual fee, the more benefits it affords you.
You Want Better Cashback Perks
You can often obtain better cash back perks from using a credit card with an annual fee. You might be able to earn enough cash back to more than cover the annual fee, which allows you to make a net gain. To do so, you’ll have to spend in the categories outlined by the credit card provider.
For example, the UOB One Credit Card offers users a flat up to 10% cashback when making purchases from merchants like Dairy Farm, Shopee, Grab and more. At the time of writing, there are no waiver-fee free credit cards in Singapore that can match these cashback perks.
UOB One Credit Card
Maximum cashback for stable budgets.
Pros
- Good fit for budgets of at least S$2,000 per month
- Easy cashback on daily spend
- Gives rebates for paying bills
Cons
- Doesn't fit inconsistent budgets
- Annual fee
You Want Better Rewards
Annual fee credit cards are also better for redeeming rewards. If you think that the value of the rewards are greater than the annual fee, such credit cards might be a good choice. However, you might want to check if you can directly benefit from the rewards – if you can’t, they would be wasted.
For example, while the Citi Rewards Card charges an annual fee of S$196.20, it provides up to 10 points for online groceries, food deliveries, ride hailing and in-store shopping purchases as well as complementary travel insurance when you charge your airfare to the Citi Rewards Card. Across the span of a year, all of these perks could add up to supercede the annual fee charged.
Citi Rewards Credit Card
Best credit card for shopping and earning rewards.
Pros
- Great for online & offline shopping
- Beneficial for frequent travellers
Cons
- Less valuable for infrequent shoppers
- Foreign transaction fees apply
You Want More Air Miles
If you’re a frequent traveler, you might want to consider an annual fee credit card. Annual fee credit cards for miles tend to offer more value than credit cards with no annual fee, or that have more easily waived annual fees. To top it off, these cards usually have extra perks that can make your travel more enjoyable.
For example, one of the best miles cards, the UOB Lady’s card, offers 4 miles per S$1 spent on up to two selected rewards categories. These rewards categories include beauty and wellness, fashion, dining, family, travel, transport and entertainment.
UOB Lady's Card
What makes UOB Lady's Card unique is that it allows you to select a preferred spend category, be it beauty, dining, entertainment or fashion, and accelerate your accrual of miles on the selected category
Pros
- High miles rewards (30 miles per $5 spent) on two categories of spending
- No minimum spend
Cons
- Cap of 2,800 bonus UNI$ (5,600 miles, equivalent to S$1,000 spend) per month
- Points have a 2 year expiry
You Want the Sign-up Bonus
Most credit cards offering generous promotions or sign-up bonuses tend to have a non-waivable annual fee attached to them. For some cards, the sign-up bonus alone may be able to offset the annual fee.
You can find these cards on our page on the credit cards results page.
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When Are Annual Fee Credit Cards Not Worth It?
Despite the benefits that annual fee credit cards bring, there are some reasons why you might not want to invest in one.
They Strain Your Budget
The most obvious drawback of an annual fee credit card is the yearly expense needed to keep it. Even if you don’t use the card, the card provider will still charge you the annual fee. The fees that credit card providers charge can go up to as high as S$1,744 (for the American Express Platinum Card). This alone can make it too costly for some to have a credit card with an annual fee.
Some credit cards have an annual fee waiver. However, trying to meet the waiver requirement by increasing your spending could stretch a limited budget. For example, if the waiver requirement is S$25,000 per year, you might go out of your way to increase your spending, even if it isn’t financially prudent for you.
Credit Cards With No Annual Fees Also Have Perks
Annual fee credit cards boast more perks, in general, than their no annual fee counterparts. However, credit cards with no annual fee can also provide you with good perks – without the yearly cost.
For example, the HSBC Advance Credit Card has no annual fee but offers decent rewards. The card lets you earn up to 2.5% cashback on both local and overseas spending when you spend over S$2,000 a month. The only downside is that the cashback is capped at S$70 per month, making it slightly less attractive than other unlimited credit card offerings.
HSBC Advance Credit Card
People with high expenses will appreciate the HSBC Advance Credit Card cashback potential.
Pros
- Great fit for budgets between S$2,000 and S$8,000/month
- Easy, low-maintenance cashback
Cons
- Lacks travel perks
- Doesn't fit highly specialised spend behaviors
Alternatives: No Annual Fee Credit Cards
Here are some alternatives to credit fees with annual fees. They are either credit cards with no annual fees, or credit cards with annual fee waiver requirements that are relatively easy to meet.
OCBC 365 Card: Best Fee Waiver Cashback Credit Card Overall
OCBC 365 Credit Card
OCBC 365 Card offers one of the best cashback rates for essentials on the market.
Pros
- 5% rebate on dining, 3% on groceries, transport, utilities, pharmacies, streaming services and EV charging
- Fee waiver with S$10,000 annual spend
- Up to 21.04% fuel savings at Esso and 22.92% at Caltex
Cons
- 0.3% rebate on general spend
- High S$800 minimum spend requirement
DBS Altitude Visa: Best Miles Card with Affordable Perks
Pros
- Great for online travel bookings
Cons
- Those willing to pay an annual fee for more bonus miles
- Affluent travellers who are willing to pay a high fee for luxury travel perks
Conclusion
To sum up, annual fee credit cards are worth it if you value the various perks and benefits they afford you – or at least value them more than the cost associated with the annual fee, or the spending required to waive it. If you want to learn more about credit cards, you can check out our page on the best credit cards in Singapore to learn more.
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Read More:
- You Should Always Use A Credit Card For These 5 Expenses
- How to Pay Down Your Credit Card Debt This Year
- The Average Interest Rate of Credit Cards in Singapore
- The Best Cashback Credit Cards For Different Types Of Spenders
- Best Personal Finance Apps and Tools To Manage Your Money
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