Here’s a scary fact: one in five Singaporeans is a delinquent debtor, with credit cards being one of the primary contributors of debt.
This is hardly surprising, given that credit card interest rates here hover at an average 26% (p.a.). In comparison, savings interest only come up to about 0.25% (p.a.) on average, which makes putting your money in the bank about as appealing as watching paint dry.
While credit card users enjoy various discounts and privileges, and even cashback benefits, when you don’t pay your bills on time, you don’t just rack up a huge amount of interest, your credit score takes a hit too.
The Credit Bureau of Singapore (CBS) defines your credit score as “an independent assessment of the individual’s risk as a credit applicant,” aka your credit score tells lenders whether you can be trusted or not.
Having a poor credit score can affects your credit limit and seriously hampers your chances of securing a mortgage loan, a car loan or even a job! Even if you do manage to secure a loan, you will likely have to fork out significantly more in loan interest if you have a less-than-stellar credit score.
Still not convinced on why you need to keep your credit score in tip-top shape? Check out our infographic below before you fall into a debt trap!