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Credit Cards: Good or Bad?

Asking if credit cards are good or bad is like asking if watching television is good or bad. Before we answer the question, we need to look at the uses of credit cards. This will help us determine whether it is good or bad for us. The plastic is convenient for not carrying cash, secure transactions (contactless) and access to various offers and discounts. But, there’s more to it than that.

With every benefit or use, there is a term associated with it. If you fail to fulfill the term(s), you end up losing heavily. The plastic is actually a double-edged sword, you can use it either for attack or for defense. Let us analyze when it is good and bad for you.

Convenient Access to Cash

Credit cards are essentially a kind of loan, which means you are borrowing money for your needs. The trick lies in how you treat it. You can easily access the credit set by the bank and use it whenever you want.

When it is good

When you borrow an amount within your credit limit and are able to pay it back before the due date.

When it is bad

Repayment is something that gives many users sleepless nights. Since many banks allow you to use money within your credit limit, the danger lies in giving in to the temptation of utilizing it to the fullest. This will put you in a fix if, by the due date, you are unable to pay it back. Remember, it is not only the amount borrowed, but you will also have to struggle to pay the amount of the high-interest rate and the late fee levied by the bank.

Cash Advances

Credit card issuers may allow you to withdraw cash from ATMs or even from the bank using your card. Some banks may even allow you to draw out money when you are overseas.

When it is good

When you take money using your credit card and pay it back as soon as you can. You don’t make a habit out of it and withdraw cash only in times of financial urgency.

When it is bad

When you make a habit out of it and do not pay it back immediately. Interest on cash advances is pricey in Singapore around 6% of the amount withdrawn or S$15, whichever is lower. Additionally, they are charged for the next day that you withdraw.

Building Credit Score

All your financial activity is recorded by the Credit Bureau (Singapore) Pte Ltd (CBS). It has access to most financial institutions and is partnered with Infocredit Holdings Pte Ltd. and The Association of Banks in Singapore (ABS).

Your credit score report is like a report card in school. Potential loan issuers can easily identify your poor or good financial behavior just by looking at the report.

When it is good

When you repay all the amount on time and are not a defaulter, you have an opportunity of building a good score. You can read here how to build credit fast. Also, having less number of credit cards are also helpful. In other words, the less financial liabilities you have, the safer the score will be. In future, this will help in getting you a loan without hassles.

When it is bad

We all know how not paying back on time will bring dire financial consequences for you. However, it is an important aspect of using cards. You miss one payment, and you are in danger of messing up your credit score. This can further diminish your chances of gaining a loan for other needs in life.

Rewards Programme

Card issuers offer some kind of reward to encourage you to keep using the card. They might offer rewards in the form of air miles, cash back or rebate. There is, however, a list of eligible purchases provided by the bank and sometimes a minimum spends to be eligible for these rewards.

When it is good

When you use the rewards programme efficiently by calculating how much you end up spending and how much you actually save. Reading the fine print to understand how it works.

When it is bad

When you shop until you drop and swipe the card thoughtlessly, you are actually paying those extra dollars which you could have saved. Also, if you shop from another retail outlet other than the partner retailer, you miss out on points. When the actual redemption value is way lesser than what you paid to accumulate points, it is a loss at your end.

Build Your Business

You could use business credit cards to construct your business venture. There are business cards that provide you a higher credit limit, and some also offer discounts on office essentials.

When it is good

When you use it efficiently and do not incur more than your company can pay off.

When it is bad

As with personal credit cards, if you bite more than you can chew, it could actually mean a loss to the capital of the company or in dire cases, the end of your business. All the other consequences of a personal card apply to business cards as well.


Apart from benefits/use of cards mentioned above, the behavior of the user is vital.

Individual behavior also matters when it comes to usage of the magical plastic.

  • If you are a procrastinator or forgetful by nature (though this should not be an excuse in the age of technology), there is a high chance you may not pay bills on time.
  • If shopping happens to be your go-to in case of sorrow or joy, it can skyrocket your bills.
  • Individuals who are careless or clumsy may end up losing the card somewhere, vulnerable to misuse.

As discussed above, credit cards are a financial tool, and the use of a tool or misuse of it lies solely in the hands of the user. If you use it according to its terms, it will serve you well.

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