Beginner’s Guide To Credit Cards

DEFINITION

Swiping a credit card is the polar opposite of using a debit card. The latter allows you to spend the money that you already have in your checking account. While, the former lets you borrow money from a financial provider. You have to pay an interest at the end of every billing statement.

Be forewarned that having a credit card does not equate to having “free” cash around. It only means that you are expected to pay back whatever you borrowed at a given period of time. Furthermore, you are held responsible to check whether you are spending within the maximum limit.

MECHANISM

How do credit cards work? As a responsible owner of a credit card, you must know the mechanism behind owning one.

Firstly, you must apply for a credit card. Research on which type of card suits your needs the best. Choose a card based on your eligibility, your credit score, your annual income, and your lifestyle. One credit card may have an annual fee, while the other may have a discounted fee for the first year.

Secondly, you must wait for the financial provider’s approval. Major credit card companies often use online services for their card applications. Thus, you will he able to review your application results immediately. Once approved, your financial provider will send you a physical card.

Thirdly, you must make purchases with your card. To spend online, simply enter your credit card number and other additional information (e.g., CVC at the back of the card). Your balance will add up as you spend. Remember to keep an eye on your credit card limit.

The last step is for you to review your billing statement and pay promptly as you have agreed.

SUGGESTION

For beginners, some of the best credit cards this year are as follows. You can count on the American Express Platinum Credit Card for rewards, OCBC 365 Card for dining benefits, and Citi VISA PremierMiles Credit Card for travel miles.

A. American Express Platinum Credit Card lets you reap these benefits:

* Receive 1 Night Stay at Swissôtel The Stamford Singapore worth S$529 upon Annual Fee payment.
* Receive an additional Samsonite Sigma 76cm Expandable Spinner worth S$600 when you spend S$4,500 within the first 3 months of Card Approval.
* Receive S$20 CapitaVouchers each, for the first two approved Supplementary Cards.
* Enjoy Love Dining @ Restaurants privileges which offers up to 50% savings on food orders at a handpicked selection of popular restaurants.
* Love Dining @ Hotels offers you exceptional year-round privileges and savings of up to 50% on food bills for unlimited visits at selected 5 star hotels around Singapore.
* Enjoy a complimentary drink with purchase of at least one item from the merchant’s menu at over a dozen fashionable bars in Singapore.

To qualify, you must have a minimum income requirement of S$50,000 per annum for Singapore Citizens and Residents and S$60,000 per annum for Expatriates. Terms and conditions apply.

B. Citi VISA PremierMiles Credit Card lets you collect travel miles, which you can use in renowned airlines’ frequent flyer and hotel loyalty programs. These include Krisflyer, Asia Miles, and Qantas. You will be rewarded fast as you spend with your card. Terms and conditions apply.

C. OCBC 365 Card is best used for dining. It has a cashback promo that allows you to reap rewards whether you dine internationally or locally. Here is a layout of the rewards:

* 0.3% cashback on ALL spending
* 3% cashback on TELCO bills, local supermarkets, and online purchases
* 3% to 6% cashback when you dine in restaurants island-wide
* 5% cashback on petrol purchases
* Up to 18.3% discounts at petrol stations
* 3% cashback on medical spending – under Child Development Account
* Complimentary travel insurance (up to SGD $800 coverage)
Terms and conditions apply.

Image Credits: pixabay.com

Be wise when choosing your first plastic card! 🙂

Sources: 1 & 2

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Have a Personal Finance Question but Paiseh to Ask? Why Not Ask on Seedly?

Personal finance is one of those things which was never taught in school but it immediately became apparent how important it is when you start working and have to pay for your own sh*t.

It gets worse when your friends start talking about stuff like “qualifying for tax relief by doing voluntary top-ups to SA” and discussing hacks to “maximise miles accrual and cashback rebates” by using different credit cards to pay for their monthly bills.

After a while, it seems like everyone has successfully transitioned to adulthood while you’re still figuring out what you actually want to do with your life.

Eventually, you’ll find yourself going quiet during group gatherings because:

If this is you, or if you’re afraid that this will be you in a couple of years time…

Why not ask the Seedly Personal Finance Community your personal finance questions?

It’s a huge online community where lots of personal finance enthusiasts and professionals from various institutions related to personal finance (like insurance, wealth management, and investment) hang out.

Best of all, you can even ask your questions anonymously!

Free Advice? Sure Boh…

If you haven’t heard of Seedly, they’re a one-stop personal finance platform, which aims to help Singaporeans make smarter financial decisions.

They do this through their educational, but fun to read SeedlyReads, which explains issues and topics related to personal finance in a simple manner.

But they also recognised that readers of SeedlyReads might have questions after reading.

That’s why they created the Seedly Personal Finance Community where you can ask your personal finance-related questions and get answers.

Yep.

They’re awesome like that.

How Can the Seedly Personal Finance Community Help Me?

The Seedly Personal Finance Community is made up of various personal enthusiasts, experts from various institutions and even the CPF Board.

Regardless of what kind of questions you have, you will definitely find a community or topic page that should satiate your curiosity. Even if you can’t find the answer, you can post your question and a community member who can answer it will do so.

Oh, and if you come across a question which you can answer, why not pay it forward by leaving an answer as well?

Some of the communities you’ll find include:

MileLion

Are you a miles or points enthusiast who wants to learn and share new ways of travelling better for less?

Then you’ll want to join the MileLion community.

Curious about credit card points accrual systems? Want to deepen your knowledge on hotel and airline loyalty programs?

Aaron Wong, founder of MileLion, will personally answer your questions.

SG Budget Babe

If you’re interested in cashback hacks or are a parent (or soon-to-be), then this is the community for you.

The host of the community page, SG Budget Babe, is none other than Dawn Fiona (founder of SG Budget Babe) herself.

Fans of SG Budget Babe can ask her questions about how to achieve a financially free lifestyle in Singapore and she’ll answer them personally.

Stocks Discussion

Whether you’re a seasoned investor or an amateur looking to make your first investment, the Stocks Discussion community is the perfect place to ask like-minded stocks investing enthusiasts and gurus for their investment insights and advice.

Some active members on the page include:

After all, it’s always better to learn from someone’s mistakes than to make them yourself right?

So, How Do I Ask the Seedly Community My Questions?

Simply head over to the Seedly website, click on “Ask Community” to get to the Seedly Personal Finance Community Page.

Once you’re there, click on “Ask A Question” to ask your question.

If someone has asked a similar question, you’ll be prompted via a dropdown menu.

All you have to do is pick the question that is closest to yours to find out what the community’s answers are!

And if it’s a question that no one has asked before, simply complete the form, choose the category which you think best suits your question and click “Post”!

Psst! If you’re really shy, just check the “Ask anonymously” box and your question will be posted anonymously.

Why Should I Ask My Questions on Seedly?

Still sceptical about asking your personal finance questions and getting answers?

What if you could stand a chance to win an all-expense-paid trip to Bali for 2 just by following Seedly communities and being active on their platform?

Seedly is sending three lucky winners to Bali (via Scoot) to enjoy a 3D2N stay at Lloyd’s Inn Bali, Seminyak for their Secret Santa Holiday Giveaway!

All you have to do is join one or all of the following communities: SG Budget Babe, MileLion, Stocks Discussion and be active.

You can ask or answer questions, and even receive upvotes to gain points and move up the leaderboard!

The Top 10 from each community will participate in a Live Lucky Draw during Seedly’s exclusive Christmas Party where one lucky member from each community will walk away with the Grand Prize. The rest will each win a $30 NTUC Income Voucher + a Mystery Gift!

Ask your burning personal finance questions, get answers, and even stand a chance to win Seedly’s Secret Santa Holiday Giveaway?

It’s truly a Christmas miracle.

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How P2P Lending Works In Singapore

BY DEFINITION

P2P Lending, short for Peer-to-Peer lending, took off in 2005. It sprung due to many companies’ efforts to deviate from the financial institutions that let them borrow money. Borrowing from banks took about two to three years’ worth of records. And, many companies do not have the luxury of time. Instead, they turn to the Internet for help.

P2P websites allowed private people from around the world to lend money to various companies. For instance, you can lend S$100,000 to a company requiring money for an expansion. In return, you will receive repayments with interest from the company. P2P lending is very attractive to lenders due to the extremely high interest, which is up to 20% per annum.

SINGAPORE: THE ASIAN CENTER

Singapore reigns as a the Asian center for P2P lending due to being a regional hub for trading, a safe storage of precious metals, and a well- established economy. Singapore is appreciated for its direct approach to lending and borrowing as supervised by the Monetary Authority of Singapore. It even issues promissory letters.

Moreover, Singapore has a cash-intensive economy where a great deal of lending happens outside of the banking system and inside of the online platforms.

HOW TO START LENDING

Take Part In A Larger Portfolio

A well balanced portfolio has a mix of low-risk assets and high-risk assets. By nature, P2P lending is a high-risk asset that invites high returns. It can be used to offset the low returns from your conservative assets such as fixed deposits or Singapore Savings Bonds (SSBs).

Seek help from a qualified wealth manager to balance out your portfolio. As a rule of thumb, experts suggest that high-risk assets should not take more than 15% of your portfolio.

Invest On What You Can Afford To Lose

One of the leading advantages of investing in P2P lending is that you can take on small amounts. You can have various investors pitch small amounts of S$1,000 to fulfill your business goals.

Limit your potential losses by investing only what you can afford to lose. Do not gamble your savings away! Any amount that you cannot recoup within two months is too much.

Spread Out Your Investments

Try not to bury your eggs in one nest. As much as possible, choose to spread out your investments in a list of companies found in a P2P website.

If one company fails to repay you, the rest can do better for your account. It is less likely that every company you chose will fail to repay you. Furthermore, a company may repay you less for a long period of time. You have to get some cushion.

Sources: 1 & 2

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Cheap Investment Opportunities In Singapore

Many Singaporeans think that should accumulate a significant amount of wealth before investing in the stock market. Well, let me prove you wrong! You can start investing with as little as S$100.

This seemingly low amount has three investment options. Choose wisely!

OPTION #1: REGULAR SHARES SAVINGS (RSS)

Regular Shares Savings plans (RSS) are also called monthly investment plans. Your mere S$100 can turn into a stock on the Singapore Exchange (SGX) as long as you commit to it monthly. Simply open an RSS plan with one of the four leading banks in Singapore. For instance, you may choose OCBC bluechip investment or POSB Investment-Saver.

The broker for the financial firm will invest your fixed amount based on the instructions you gave. I may instruct the broker to invest to Strait Times (STI) every month or to other bluechip companies. Do your research before spending! The best part about it is that you have full control over your investment decisions. What’s more? Your instructions can be submitted online thru the bank’s platform.

OPTION #2: UNIT TRUSTS

One a scale of risk taking, you may fall under the conservative end. Fortunately for you, you can invest your money in unit trusts. Unit trust works by combining money from a set of investors. The pool of money will then be invested by a professional fund manager. The professional fund manager will have control over your investment.

Nonetheless, you must educate yourself about the type of unit trusts wish to invest in. Unit trusts can be bought for about S$100 in various local banks.

OPTION #3: ROBO-ADVISORS

The future is upon us! Investors can use robo-advisors to allocate their assets in the portfolio. Robo-advisors automatically help investors by tapping on the formulas to manage their assets.

It is a relatively new system in Singapore. Hence, there are only a few brands to choose from. For instance, you may hop to Smartly or AutoWealth. However, the latter has a minimum investment of S$3,000 while the former does not. These two platforms use different algorithms to arrive at optimal solutions. Moreover, these platforms can charge up to 1% per annum for managing your money. The fee is calculate based on the percentage of the total portfolio held in your account.

Source: dollarsandsense

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