3 Reasons To Own & Use A Credit Card And 1 Reason To Not Do So

Credit card debt and annual fees may sound scary, but here’s how you can benefit and actually save money by owning a credit card.

ValueChampion Editorial Team

by ValueChampion Editorial Team on May 13, 2024

credit card paywave

Credit cards are one of the most misunderstood financial instruments. When Singaporeans think of credit cards, some of us might relate them to unhealthy credit card debt (with sky-high interest rates), exorbitant annual fees and pesky minimum spending requirements.

However, when you spend carefully and use your credit card strategically, you can take advantage of cashbacks, points and other perks. Ultimately, using credit cards to save money comes down to discipline. If you make it a point to understand how credit cards work, and exercise the right kind of restraint, you can save – or even earn – significant amounts of money in the long run.

Earning Cashback Directly

All credit cards in Singapore offer some sort of reward for using them for your purchases, which include incentives like cashback, reward points (which can be traded for air miles, discount vouchers or actual products), or airline miles. However, the most common reward, and perhaps the most enticing, would perhaps be cashback.

For the uninitiated, cashback refers to receiving back a percentage of what you spend in the form of money. It is akin to getting a perpetual discount whenever you spend. Sounds too good to be true? It really is not. Credit card companies are constantly competing to provide the most competitive rewards for their customers – some cards offer lucrative sign-up promotions, while others offer higher cashbacks for niche spending categories like travel or sustainability.

With so many cards available on the market to choose from, it is no wonder that Singaporeans have a hard time deciding which is the best credit card in Singapore. In particular, it is hard to compare the different cashback rewards across multiple categories for various credit cards. Luckily, we have combed through hundreds of credit cards in Singapore to distil the best credit card for you!

Citi Cash Back Card

Citi Cash Back Card

Great cash back card for average spenders looking to benefit from everyday purchases.

Citi Cash Back Card


  • Great dining and groceries rewards
  • High petrol discounts


  • Lacks shopping and entertainment rewards
  • Not suitable for lower budgets
More Details

Hence, by earning cashbacks on your purchases, you can accumulate multiple savings consistently. Knowing your areas of spending, and the best credit card that complements it, is therefore one way to help save money.

For Those Who Possess a Sense of Wanderlust

Frequent traveller who enjoys spontaneous weekend getaways to Bali or Bangkok? Or are you a jet-setting businessperson who travels often for work? Or maybe you are a young adult who still possesses a sense of wanderlust to travel during the summer and winter break? Fear not! You can also save money by earning air miles rewards for every spend.

How do miles work to help save money? Depending on the airline, your miles can be used to book flights, redeem hotel stays and other rewards. So, if you travel often, you can capitalise on your travelling-related expenditure to subsidise your future travelling costs! But in order to do that most efficiently, you would need the correct credit card for air miles.

Apply now and get up to 31,000 miles plus first year annual fee waived. For new-to-UOB Credit Cardmembers only. T&Cs apply.

KrisFlyer UOB Credit Card

UOB KrisFlyer Credit Card is a great option for SIA Loyalists who tend to fly on a budget.

KrisFlyer UOB Credit Card


  • 3 mi per S$1 on SIA, SilkAir, Scoot & KrisShop
  • Up to 3 mi on dining, transport, online shopping & travel
  • Expedited KF Elite Silver status, Scoot privileges
  • 10,000 annual bonus renewal miles


  • Just 1.2 mi on non-category overseas spend
  • No lounge access perks
  • No spend-based fee-waiver
More Details

Credit cards can also provide you with other travel benefits excluding just miles. For the higher spenders, a card that grants you access to luxury travel perks is definitely worth it.

But How Do Credit Card Companies Earn Money Themselves?

With so much cashback, rewards, discounts and air miles that credit card companies give out annually, have you ever wondered how they stay profitable and how that’s related to you saving money? Here is the secret.

Credit card companies pay for rewards with revenue from two main sources: you, and the merchants who accept their cards. You are likely aware of your contribution. Remember the annual fees and the high interest rates if you default on your credit card debt? Yes, credit card companies earn their revenues through these.

But most consumers don’t know about the fees that retailers pay card issuers behind the scenes. These fees, called interchange fees, are set by credit card processing networks like Visa and MasterCard to cover both the risk and cost of processing credit card payments and can generate billions of dollars in revenue.

Unfortunately, merchants usually try to recoup the cost of credit cards by passing down the costs onto consumers like us. What this means is that retailers may raise their prices to compensate for interchange fees, so consumers who pay in cash end up subsidising credit card rewards programmes indirectly.

The bottom line is this: if you are not using a credit card for purchases, you are actually losing out by paying for people who do use credit cards. Compounded with the cashback and other benefits you might be getting, getting a credit card is indeed crucial in helping you save your finances when adulting.

The Unspoken Dangers of Credit Cards

cancel credit card
Source: Pexels

The word ‘credit’ lends a clue in the nature of credit cards: they are essentially pre-approved loans. In other words, whenever you swipe your card on a payment machine, you are spending on borrowed money. The interest rates on unpaid credit card bills are indeed mind-bogglingly high – most rates are between 25-27% per annum, and the interest is charged on a daily basis. This does not include other miscellaneous fees such as late fees and finance charges, which can add another S$100 to the bill.

In comparison, personal loans only have an interest rate between 6-9% per annum.

Repeatedly missing out on your credit card repayments is a good way to ruin your credit score. A bad credit rating spells disaster on your other loans, such as a lower loan amount for mortgage loans and education loans. In the worst case scenario, you won’t be able to qualify for them at all. Indeed, missing out on credit card repayments could lead to a disastrous snowball effect.

So are credit cards for everyone? If you are earning a stable income, prompt on your bills, and want to accumulate savings and benefits as you spend, then go for it. Otherwise, it might be better to hold off until you are in a better financial position to do so.

Check out our roundup of the best credit cards before you find the most suitable one(s) for you!

Compare Best Credit Cards in SingaporeFind Out More

Read More:

Why You Should Avoid the Monthly Minimum Credit Card Payment Trap

3 Tips on How to Get Rid of Your Piling Personal Debt and Credit Card Balance

3 Best Credit Cards For Women In Singapore

5 Reasons Why Your Credit Card Application was Denied

How To Maximise Credit Card Rewards And Beat Inflation

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