Things you should avoid paying for with a credit card

For many Singaporeans, credit cards feel like a financial lifeline. They offer ease at checkout, rewards on spending, and the flexibility to delay payments. But what appears as convenience on the surface often hides a deeper cost structure: annual fees, compound interest, and transaction-based surcharges that are easy to overlook.

The Monetary Authority of Singapore (MAS) and financial educators alike have long emphasized responsible credit card use. The danger is not in having one—it’s in how and where you use it. Some expenses quietly trap cardholders in high-interest cycles that can take years to repay. Here are three major types of expenses that should never be charged to your credit card, no matter how tempting the offer or how urgent the situation feels.

1. School Fees and Education Loans

Many private institutions in Singapore and abroad now accept credit cards for tuition payments. Some even advertise promotional interest rates or “easy monthly plans.” But dig deeper, and you’ll find that using a credit card for large education bills is among the most expensive ways to fund learning.

Let’s take a typical scenario: A one-year diploma course at a private institution costs S$10,000. If you choose to pay this using your credit card and don’t pay off the balance immediately, you’ll incur around 3.5% monthly interest. Over a year, this translates to over 50% in annual interest—adding more than S$5,000 to your original tuition cost.

Unlike structured education loans, which offer longer repayment periods and lower fixed interest rates, credit cards are not designed for long-term borrowing. There’s no grace period aligned with graduation or job placement. Instead, interest begins accruing immediately, and late payment penalties can push the effective rate even higher.

What to do instead:
If you need help funding tuition, consider MOE-recognized education loans, CPF Education Scheme (if applicable), or government-backed study assistance programs. These offer clearer repayment terms, capped interest rates, and better protection for your financial future.

2. Gambling-Related Spending

Gambling is classified under high-risk, high-regulation categories for a reason. Casinos, online betting platforms, and even lottery services may offer credit card payment options—but using them comes with both financial and psychological risks.

Most banks treat gambling transactions as quasi-cash advances. This means you won’t enjoy the usual 20–25 day grace period, and interest is charged immediately—often at a higher rate than normal purchases. Some banks may also impose administrative charges or block cashback and rewards on such transactions.

Beyond the structure, there’s a behavioral layer to consider. Credit card use can psychologically decouple spending from real cash. When combined with gambling, this detachment can fuel addiction, lead to overspending, and damage long-term financial stability.

In fact, the Ministry of Social and Family Development includes credit-based gambling as one of the red flags in financial addiction assessments. Using borrowed money to gamble is not just risky—it’s a signal that your spending behavior may need external support.

What to do instead:
Set physical and digital spending limits using debit-based tools. If gambling is already a concern, consider self-exclusion programs or debt counselling with Credit Counselling Singapore (CCS), which offers support for those struggling with unsecured debt from high-risk behavior.

3. Medical Bills and Emergency Care

Healthcare costs are one of the few expenses that people may feel they have no choice but to charge. After all, emergencies don’t come with a payment plan. But placing large hospital bills on a credit card can lock you into high-interest repayment cycles with no built-in protections.

In Singapore, credit cards are increasingly used for private hospital fees, outpatient specialist bills, and elective procedures. But medical bills can be sizable—ranging from S$3,000 for minor day surgery to over S$20,000 for major treatment. If left unpaid, the monthly interest on these balances can reach hundreds of dollars.

More worryingly, you may end up paying interest on late-arriving items like diagnostic tests or pharmaceuticals, since many hospitals process charges in stages.

What to do instead:
Always start with available support systems:

• MediSave and MediShield Life cover basic inpatient and long-term treatment costs.
• Integrated Shield Plans (IPs) can reduce out-of-pocket costs for private hospital care.
• In serious cases, explore medical assistance schemes from the Ministry of Health or private medical loans offered at lower interest than credit cards.

If the bill still exceeds your means, speak with the hospital’s finance office. Many offer internal installment plans or referral to social service agencies for hardship assistance.

Beyond these three categories, another layer of cost often slips under the radar: merchant-imposed surcharges. These are small transaction fees that accumulate unnoticed and are especially common in the following settings:

• Education: Some private institutions charge a 1.5–2.5% fee for credit card payments, citing “processing costs.”
• Insurance: Yearly premiums paid by card may incur administrative charges or exclude rebates.
• Government services: Certain agencies charge a convenience fee for online card transactions.

These costs, though individually small, can quietly add up over time—undermining any cashback or reward point benefits you hoped to earn.

How to avoid them:

• Always check payment terms before selecting “credit card” as the option.
• Ask the merchant if debit, NETS, or PayNow are surcharge-free.
• Consider using credit-linked payment wallets (e.g., PayPal) that sometimes shield you from merchant-imposed charges.

If you're trying to stay debt-free without giving up digital convenience, here are four practical alternatives that preserve flexibility without racking up interest:

1. Debit card or NETS
   These options draw directly from your bank account, eliminating the risk of rolling debt. For local transactions, NETS often has zero merchant fees and is widely accepted in Singapore.
2. Air miles and travel rewards
   Instead of charging new expenses to earn miles, use existing rewards to book flights or offset travel costs. Be strategic about redemptions—flights tend to offer better value than retail items.
3. Installment plans (only when zero-interest and fee-transparent)
   Some retailers offer genuine 0% interest installment plans—but always read the fine print. Confirm there are no early repayment penalties, processing fees, or bundled insurance charges.
4. Cash from emergency savings
   Even dipping into a rainy-day fund is less damaging than incurring 26–28% annual interest on a credit card. Replenish the fund gradually afterward—but avoid compounding the emergency by adding debt.

Credit cards serve an important role in modern finance. They provide access, rewards, and even fraud protection. But not every payment belongs on a revolving credit facility—especially when the cost of delay compounds silently. The three categories outlined here—education, gambling, and medical bills—share a common trait: they’re either high-ticket or high-risk. Using a credit card to fund them doesn’t just add interest; it often creates stress, compromises future liquidity, and distorts your sense of affordability.

When deciding how to pay, ask yourself:

• Is this a one-time purchase or a recurring cost?
• Do I have a repayment plan in place—or am I just delaying the pain?
• Am I choosing this method for rewards, or because I lack other options?

These questions help reframe credit not as a shortcut, but as a conscious financial decision. In an era of rising costs and shrinking buffers, that clarity matters more than ever.

In today’s fast-moving digital economy, credit cards offer speed, rewards, and convenience. But convenience comes at a cost when we use the wrong tools for the wrong types of spending. When a credit card is treated as a default payment method—rather than a strategic financial instrument—it opens the door to silent debt creep.

Medical bills, school fees, and gambling expenses all share one thing: they are either essential, unpredictable, or emotionally charged. These categories require thoughtful financial planning and sometimes, policy-based support—not open-ended credit facilities with compounding interest.

What makes these expenses dangerous on plastic isn’t the spending itself—it’s the illusion of affordability. That illusion blurs the line between flexibility and fragility. Once repayments begin to crowd out savings, your long-term goals quietly recede. The better habit isn’t cutting up your card—it’s choosing when not to reach for it. Because financial discipline isn’t about denial. It’s about designing smarter defaults.