In 2017, almost 30% of the population in Singapore were expatriates. Given that Singapore is a developed economy with a English-fluent and well-educated workforce, it's not surprising that foreigners curious about Asia and SE Asia have decided to venture out to this country. While most parts of moving to Singapore (like finding a job or a place to live) should've been taken care of before your arrival, you may still be confused about other daily necessities while living in Singapore. Among many things, finding the right mode of payment is one of the most basic and important tasks for any expats in Singapore. Here, we discuss a few reminders you can use to determine how to go about making this decision.
Where Are You Coming From?
Depending on where you originally reside, it may or may not make sense to apply for a credit card in Singapore. This is because credit card issuers offer different levels of rewards in each country. For example, credit cards in the US tend to offer rewards that are only slightly lower than those offered in Singapore, while cards in the UK or in Australia are notorious for offering very low levels of rewards. If you are coming from either of these two countries, applying for a card in Singapore is a no brainer. If your home country already offers cards with 3-5% rewards rate in either cash back or miles, then you have more factors to ponder before getting a card locally in your new home.
How Long Will You Be in Singapore?
The second factor to consider to determine what kind of card you should be using in Singapore is the expected length of your stay. If you are planning to work only 1 to 2 years in Singapore before returning to your home country, it actually might be better for you to get a card in your home country that charges no foreign transaction fee. This is especially relevant for those who are looking for an airline miles credit card, so that they can rack up miles in an account that will be useful & relevant for you even after they leave Singapore. This exercise is also crucial for those moving from countries where credit score has a huge significance. Not charging your existing cards can hurt your credit score, which could negatively affect you in the future when you want to buy a house.
On the other hand, those who plan to stay in Singapore long-term can gain a lot from credit cards that are offered locally. Credit cards in Singapore tend to yield higher rates of rewards for consumers than cards in most other countries around the world. For example, even the best cash back cards in the US provide maximum of 2-3% of rewards, lower than 5% or more provided by the best cash back cards in Singapore. For example, Citi Cash Back Credit Card in Singapore can provide up to 8% savings on all groceries and dining expenses, which should cover most of an average person's daily budget. Not only that, getting a card locally can also help you take advantage of special deals that banks offer to earn you even bigger savings at certain partnering companies like grocery supermarkets, ride sharing apps, restaurants, bars or even travel booking sites.
How Often Will You Travel (for Work or to Visit Family Back Home)?
For people who travel back home frequently, it may be worthwhile to keep using a card that was issued in their home countries. Most credit cards in Singapore charge a 2.5% to 3.5% foreign transaction fee, which could offset most of the rewards people earn on those cards while visiting their friends and families in their native countries. In contrast, you might be able to find a decent credit card back home that doesn't charge any foreign transaction fee, like the Chase Sapphire Preferred Card in the US, and use it in Singapore (or anywhere else in the world). This way, you can still earn rewards wherever you are while avoiding the negative effects of foreign transaction fees.
How Do You Tend to Spend Money?
Once you've decided to get a card in Singapore, you should then compile a list of "expenditure categories" that you tend to spend the most on. These tend to be areas like dining at restaurants, going to bars (entertainment), groceries, petrol, shopping and transportation. Then, you should look for a card that provides the highest rewards rate for your biggest spending categories. Those who tend to have a well-rounded budget may also prefer flat-rate cards that reward the same level of cashback on every spending category. On the other hand, those who travel frequently to explore the rest of SE Asia, investing in a miles credit card could be a great way to save on flights and hotel expenses.
Be Mindful of Annual Income Requirements
Last but not least, it's useful to be aware of the fact that most card issuers use the applicant's annual income level instead of credit score to determine whether he is eligible for a specific card. Therefore, you don't need to have a record of your creditworthiness (i.e. loans, etc) to get a card locally. However, foreigners are generally required to earn a higher level of income than locals to qualify for the same card, so you should make sure your income level is sufficient for a card that your new local friend recommended. In general, most credit cards in Singapore require S$40,000 to S$60,000 of annual income for foreigners, though some premium cards can require upwards of S$100,000.
This was first published at Value Penguin's website, "5 Factor for Expats to Consider Before Applying for a Credit Card in Singapore".