The Average Interest Rate of Credit Cards in Singapore

The most important feature of credit cards to understand is the interest rate you would be charged if you do not pay your credit card balance in full each month. We break down the average credit card and cash advance interest rates in Singapore.

ValueChampion Editorial Team

by ValueChampion Editorial Team on Jun 24, 2024

swiping credit card

Credit cards can be a convenient and rewarding method of payment for people who use them properly. However, they are a form of “credit,” meaning that a person can borrow money from the bank by using a credit card to pay for things.

The way this works is rather simple. You get a credit card, use it to purchase things, and not pay down your balance at the end of your billing cycle. Such behaviour, however, has the potential to ruin both your credit score and your daily finances.

Here, we discuss the average interest rates of credit cards in Singapore, which is the major “danger” and cost associated with using a credit card.

Compare The Best Credit Cards in SingaporeFind Out More

pay with credit card online
Source: Pexels

Average Annual Percentage Rate (APR) of Credit Cards in Singapore

After collecting data on all of the major credit cards in Singapore, our team at ValueChampion found that the average interest rate of credit cards in Singapore was about 25%. The highest interest rate was 28%, while the lowest rate we observed was about 15%.

Interest Rate of Credit Cards (APR)
*Information as of June 2024

It’s important to note here that these credit card interest rates can be significantly greater than what they look like on the surface.

Because the interest on your credit card compounds on a daily basis once you build an unpaid balance at the end of your billing cycle, your debt can increase exponentially with each passing day that you don’t pay off your balance.

This works differently from other loans like home loans, whose interest is only charged at the end of the month. If you want to find out more about how credit card APRs work, you can learn more by reading our guide here.

Find the Cheapest Home Loans in Singapore

Credit Card APR vs Cash Advance Interest Rate

Credit card debt and cash advances are two separate things. First refers to the interest being charged to your account if and when you fail to pay down your balance at the end of the billing cycle. The latter refers to the interest being charged to the amount of cash that you end up “borrowing” from your credit card, aka when you use your credit card like an ATM card.

Typically, you should only use a cash advance when you need cash immediately, and have no other means to get cash except by using your credit card. This is not something we typically do not recommend our readers to do, as it incurs high fees, unlike drawing money from a savings account which has effectively zero fees.

borrow money loans cash
Source: Unsplash

In general, the average interest rate on cash advance is around 26-27%, with the maximum reaching 30% in Singapore. This is on par with the average of 27.7% for credit card APR. Some banks like DBS also charge an 8% Cash Advance Fee on the amount withdrawn per transaction. These costs can quickly add up to become very expensive.

Another key difference between credit card debt and cash advance is that the interest accrues immediately for a cash advance, while you only start accruing interest on your credit card debt after your billing cycle is over.

Related: 6 Hidden Credit Card Fees in Singapore You Should Be Aware Of

Average Cost of Balance Transfers vs Credit Card Interest Rate

If you are currently racking up an increasingly unmanageable amount of credit card debt, you may want to consider getting a balance transfer or debt consolidation plan.

Banks offer balance transfer products that allow you to transfer your unpaid credit card debt over to a different account that charges you much lower interest rate than the 27.7% average we mentioned above. Alternatively, if you unsecured debt is high enough, you can get a debt consolidation plan, once again at a much lower interest rate, that will allow you to pay off all your credit card debt in a single instalment every month.

Now that you are more informed on the major costs associated with credit cards, you are in a better position to choose a credit card that will not overextend your finances. Learn more about the different credit card offerings available at our credit card results page below!

Compare The Best Credit Cards in SingaporeFind Out More

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