How to reduce your Singapore credit card fees to effectively zero

Credit card fees. We dislike them and want to avoid them, and it can get scary if they add up. One of the best things about credit cards is spending first and paying later.

Sometimes we get trigger-happy, or card-happy, in swiping everything we forgot about fees, and we end up paying more than we expect.

So in this article, we will be going through annual, transactional, and miscellaneous fees and how you can maximise your savings by avoiding them altogether.

We will also be showcasing a few credit card recommendations based in Singapore.

Annual Fee

Having a credit card is a privilege, and in some cases, it can be viewed as a status symbol (especially if you are an AMEX user).

Most providers will enact an annual fee to have this privilege of using a credit card, similar to a membership programme. Some credit cards come with perks and rewards, like free lounges in the airport or specific discounts for some high-end restaurants and hotels.

Another reason why credit cards have an annual fee is that credit cards allow you to revolve balances and pay off your purchase over time. However, in most cases, carrying a balance requires you to pay interest charges.

So how do you deal with annual fees for credit cards since they tend to be the most expensive fixed cost for it?

There are three options: Get a credit card with absolutely no annual fees, find a credit card with annual fee waivers for suitable conditions, or consider if your benefit of using the card (rewards programme; membership-only perks) is worth the expensive annual fee.

Since the third option is more subjective, we can provide you with two cards that fit the criteria for the first two options.

CIMB Visa Infinite Card

• Unlimited two per cent cashback on travel, overseas and online spend in foreign currencies
• Promotions: Receive Sony WF-1000XM3 (Worth $219) + $80 cash via PayNow or $200 cash via PayNow. Spend a minimum of $988 within 60-day periods following card approval.
• Applicable to new-to-card CIMB members only. No promotion for existing CIMB cardmembers. Promotion not valid with other welcome offers.
• Promotion period: June 1 - 30, 2022

Fees, rewards & perks

• Annual fee: Free for life
• Unlimited two per cent cashback on all travel and overseas spend
• Unlimited two per cent cashback on online spend in foreign currencies
• Unlimited one per cent cashback on all other spend
• Free travel insurance, three complimentary access to airport lounges
• Visa Infinite Concierge
• CIMB zero per cent Interest i.Pay Instalment Plan

Analyst's review

CIMB Visa Infinite Cardis an excellent, no-fee way to earn on all spending. While most competitors also charge $170+ fees, CIMB Visa Infinite Card is free forever. Competitor cards also offer 1.5 per cent flat cash back, so frequent travellers are far more likely to benefit from CIMB Visa Infinite Card.

What are the card's additional benefits other than not having any annual fees? Cardholders can earn one per cent unlimited cash back on all spending and two per cent for travel expenses (hotels, airlines, travel agencies & more) after a $2,000 minimum threshold.

OCBC Titanium Card: Miles for Retail Shoppers

• Four miles/$1 on fashion & merchants like Amazon, Lazada
• Promotions: No promotion currently being offered

Fees, rewards & perks

• Annual fee: $192.60 (two years fee waiver + automatic annual fee waiver with min annual spend of $10,000)
• Four miles (10 OCBC$ Pts) per $1 spend on select online and retail purchases (Lazada, Shopee, Amazon and Qoo10)
• 0.4 miles (one OCBC$ Pts.) on all other spend
• Two per cent cash rebate on BEST Denki spend

Analyst's review

OCBC Titanium Rewards Card provides many perks that can benefit retail shoppers, such as earning four miles for every $1 spent on retail department stores and electronics–plus on various retail merchants, both online and offline. There is no minimum spend requirement.

Despite the annual fee of $192.60, cardholders can waive the fee by just spending $10,000 annually. Competitor cards do not offer a fee waiver, making OCBC Titanium Card the best option for shoppers looking for flexibility paired with no annual fees.

Annual Percentage Rate (APR)

If you want to know more about alternatives to credit cards with no annual fee (or waiver), click here to see a comparison.

The interest rate you have to pay for borrowing money on your credit card is the Annual Percentage Rate (APR). For more information about APR, click here.

APRs are a little more complicated, and the accumulation of interest over time can be extremely subtle but problematic when it is obvious.

You can transfer your balance to a zero per cent APR credit card to curb high APR. Do note that some cards will charge a three-five per cent balance transfer fee, so choose your credit card wisely when balancing transfer fees and length of time for 0 per cent APR.

Processing Fee

The first fee that we will discuss is the credit card processing fee.

This processing fee is a cut that the credit card issuer, a processing network and the merchant’s bank take to facilitate the transaction between you and the merchant; you have to pay this no matter what, as it is dependent on the purchase. This is not counted as a credit card fee that we can reduce.

Foreign Exchange Fee

Some credit cards charge a foreign transaction fee when you purchase an item in a foreign currency.

This includes buying an item online with foreign currency or even using your card overseas and paying for items charged in a foreign currency. This fee is typically around one per cent to three per cent of your spending. Some travel cards may skip this fee as part of their unique selling proposition.

Late Payment Fee

Credit card companies love to punish people who do not pay their balances on time.

Even if your credit card does not have an explicit late fee stated on their terms and conditions, some cards will charge you a penalty APR, typically higher than your card’s current variable APR.

This penalty APR may last for months until you’ve made consistent on-time payments or indefinitely.

Penalty APR will make your credit card debt even more expensive, costing you even more than a late fee would.

To prevent having a late penalty, do pay your bills on time. Either via automatic payments or by being aware of your expenses via budgeting habits.

Conclusion

Now that you are more aware of credit card fees and how to deal with them, you can maximise your credit card to fit your budget and needs.

ALSO READ: Are annual fee credit cards in Singapore worth it?

This article was first published in ValueChampion.