Friday, August 06, 2010

My experience on using credit card

If you've been following my blog, you'll know that I've trouble applying for credit cards. It's a miracle that I got the POSB credit card when I applied a few months ago. Miracle because all the other cards have rejected me, despite the aggressive sales person pushing the cards, touting them as free.

After a few months of purchasing things on credit, I have very positive comments about it. I'm sure everyone knows about the dangers of bursting your own credit limits and going into debt blah blah. There are very good things to say about credit cards based on my limited experience.

1. It improves my cash flow.

Interesting isn't it? How can being in debt increase my cash flow? Firstly, you must understand that my work does not give me a nice pay check at a fixed date every month. It comes in bits and pieces throughout the month. Sometimes, because of the amount of money I diverted away from my spending account for savings, I do not have much liquidity to pay for things until my 'paycheck' comes in. Thus buying things on credit allows me to have slightly less than 1 month of interest free money for such spending. I especially like how I can control the date in which I have to pay my bills (of course, I pay in full before the due date), thus offering me a lot of freedom to control my cash flow.

I don't think people with a fixed paycheck will understand fully what I meant, so this advantage of having a credit card is no big deal for them.

2. I get points to offset my purchases.

This is not a big deal for me. Since mine is a POSB card, there are cash rebates for spending using the card. So far, I've got less than $10 rebate after using it for 4 months...really no big deal. Nice to have it, but really not essential. Perhaps after some super big expenditure like buying tons of furniture or wedding banquet, would I realise the benefit of having cash rebates. I'll know it soon ;)

3. Great discounts at selected places

I think this is fantastic. Sometimes, by flashing your cards, you get a lot of freebies that spending cash would not entitle you to have. I am often puzzled by how credit card companies manage to pull off such a deal for their customers and what the restaurants that offer such treats got in return. More business? Either way, I'm not complaining. I'm eyeing the buy 1 get 1 free lunch buffet at the chatterbox to see what the famous chicken rice is all about, haha :)

Of course, this post is not to encourage you to start swiping your cards right now. There are two sides of a coin, and thus a credit card is just like a tool - whether it's good or bad depends on how you use it. To those that have been scared by various literature that having a credit card is very risky and you can go bankrupt - yes, it's true, but it all depends on the user.


AK71 said...

Hi LP,

I love the chicken rice at Chatterbox. I also get 1 for 1 but with my OCBC Titanium Mastercard. Yum yum.

I save so much on so many things using credit cards. I use my Citibank Dividend Mastercard the most as it gives cash back: 5% on petrol, 2% from restuarants, GNC, pharmacies and supermarkets! UOB Signature card gets double points and I use it for most other transactions like the $3k as a downpayment for my new car. UOB cards also get rebates at Best DENKI. Enjoy your credit card! :)

la papillion said...

Hi AK,

Hmm, the chicken rice is soo good? Haha, must try it for myself and let you know :)

I tried applying for citibank but failed...oh well :) I guess one is enough for me :) Luckily my gf had a number. She forms almost a complete collection already, except for hsbc and stanchart :)

PanzerGrenadier said...


I now only have two credit cards, POSB Everyday Mastercard and M1-Citibank. I have categorically refused all other cards and don't miss a single thing.

The main issue with having too many cards is keeping track of the bills and getting hit with late payment fees when you forget to pay. The other is that the brochures and "deals" thrown at cardholders to entice us to spend is a temptation that multiplies the more cards you have.

Thus, I generally use NETS for small purchases and mainly use credit cards for petrol, occasional dining out and subscriptions to overseas professional associations.

The main risk of credit card for those who are not so aware of their cash flows is that it tends to encourage an "enjoy now pay later habit", once hooked, makes it challenging to live within one's means.

Like you said, it's a tool that can be used or abused depending on the user.

Be well and prosper.

Sgbluechip said...

Hi LP, I understand that you are applying credit card for building up your credit history. But if you are not taking a home loan from bank, that shouldn't matter right? Anyway, if you are shopping for a home loan, do drop me an email, I got lobang for rates that are at least 1.5% better than HDB loans.

Anonymous said...

Hi Lp,

There is this so call Chatterbox chicken which is at Downtown East...

The chef is previously from chatterbox, and the price is much more cheaper over at downtown east.. you can give it a try over there..


la papillion said...

Hi PG,

Haha, I kept a separate spreadsheet for my credit card expenses :) I can imagine that without keeping tabs, you just spend and spend because you are using invisible money, so you don't really feel the pain - that's the danger I think.

Having one card is easier to keep tabs too, you're right :)

la papillion said...


Hey :) No lah, gng to apply from HDB loan itself. The credit history thingy is in case I need to get a private property later on.

Thanks for the lobang though! :)

la papillion said...

Hi Elaine,

I heard of it before, haha :) I think I'll still go for the 1-1 lunch buffet :) Seems like it's a good deal - but not sure if I've the time to actually go there, haha