Should you get a credit card? Here's how to decide

Credit cards are often seen as a rite of passage into adulthood. But for many Singaporeans, the decision to get one is wrapped in uncertainty. Will it boost your financial flexibility—or slowly drain your discipline?

As with most financial tools, the answer depends on how you use it—and whether it aligns with your long-term goals. This explainer walks you through the real-world pros and cons of owning a credit card, and what it takes to use one well.

For those who plan ahead and pay in full, a credit card offers far more than just points or cashback. It’s a tool of access, signaling, and—if used well—long-term financial leverage.

Credit cards simplify global transactions. Booking flights, reserving hotels, and renting cars all typically require a card. Some cards even come with complimentary travel insurance, lost luggage protection, or emergency medical coverage. That’s not just about luxury. If you’re a young adult taking your first solo trip or a working professional juggling overseas assignments, those features can protect you from real logistical and financial stress.

There’s also a practical visa consideration. Certain embassies request financial documentation when issuing multi-entry or student visas. A credit card statement—with consistent on-time repayments—can quietly signal financial stability. In emergencies, cards offer access to funds without dipping into your savings. That flexibility matters most when things go wrong abroad.

In Singapore, your credit score is managed by the Credit Bureau Singapore (CBS). While it’s not as widely used as in the US, it still plays a crucial role when applying for loans, property financing, or even some jobs in regulated sectors.

CBS assigns a risk grade and score based on your repayment behavior, credit mix, and length of credit history. If you have no credit cards, you may be classified under a "thin file" category—with no score at all.

Using a single credit card responsibly for 12 to 24 months—always paying in full, never missing deadlines—can lift your score. Over time, this enables you to access better home loan terms, credit lines for business use, or refinancing options if rates change. Importantly, you do not need to carry a balance or pay interest to build credit. Usage and repayment behavior alone can build your track record.

Consider Sarah, a 26-year-old HR executive earning S$4,000 monthly. She applies for an entry-level cashback card with no annual fee, sets a credit limit of S$2,000, and puts her mobile bill and transport card top-ups on it—about S$200 a month.

Every payday, she auto-pays the full balance. She doesn’t use the card for lifestyle spending or impulse buys. After 18 months, Sarah's credit score moves from "No Score" to "AA" (the highest CBS grade), unlocking access to preferential home loan rates and lower-cost renovation financing when she buys her BTO. The card didn’t build her wealth—but it enabled cheaper capital when she needed it most.

When a credit card becomes a liability?

The trouble with credit cards is that the costs are invisible until they compound. You don’t hear the money leaving. You don’t feel the sting right away. And that makes it easy to ignore warning signs.

1. Impulse Control Is Tested at the Point of Sale

In behavioral psychology, this is called “decoupling.” You make the purchase now, and the pain is delayed. Compared to parting with actual cash or watching your bank balance drop with a debit card, using a credit card dampens spending awareness.

This is why many financial planners say that cards are more dangerous to impulsive buyers than even personal loans. There’s no formal application process to spend. Your only limiter is your willpower—or your credit limit.

Apps like YouTrip, GrabPay, and BNPL options such as Atome or Hoolah already nudge consumers toward faster checkouts. A credit card can amplify this behavior unless paired with conscious budgeting and spending limits. If you’re the kind of person who shops to soothe boredom or stress, owning a credit card might do more harm than good—at least for now.

2. The Interest Trap Is Quiet, But Real

Credit card interest rates can exceed 26% per annum. That means a S$1,000 balance could balloon into S$1,260 over 12 months—even without additional spending. And that’s before compounding late payment fees.

Minimum payments are designed to keep you in debt, not to help you eliminate it. Missing just one payment can trigger a downward spiral, especially if you also have BNPL or hire purchase payments to manage. In contrast, a structured personal loan—used only when absolutely needed—comes with fixed terms, clearer timelines, and usually lower interest rates. So while credit cards may feel flexible, they can quietly become the most expensive debt you hold.

BNPL is marketed as a friendlier alternative to credit cards. But in practice, they carry similar risks—especially when stacked.

Credit cards charge interest only when payments are missed or delayed. Most BNPL providers split your payment into three or four equal chunks, often with zero interest. That sounds safer—but the risk shifts from interest to overcommitment.

Many BNPL users juggle multiple repayment schedules across platforms. That creates a cash flow time bomb, especially for young workers whose salaries are fixed monthly but whose BNPL deductions might occur weekly or fortnightly.

If you must choose, a single credit card—paired with strict usage and repayment discipline—is often more predictable and transparent than juggling multiple BNPL services. But for those with any risk of overspending, it’s best to stick to debit and planned savings.

Not everyone needs or wants a credit card—even those with strong financial habits. You might be a freelancer with variable income who prefers cash-based budgeting. Or a married couple with shared accounts and a joint emergency fund. Or someone who’s already prepaid most recurring expenses. In those cases, the additional line of credit doesn’t provide meaningful value—and avoiding it reduces the number of tools you need to manage.

In fact, some of the most financially secure professionals in Singapore carry only one debit card, a high-interest savings account, and comprehensive insurance coverage. Their planning doesn't rely on borrowing. It relies on buffers.

Before signing up, ask yourself five key questions:

1. Do I track my monthly spending closely?
   If not, you might lose visibility once you start swiping instead of using cash or debit.
2. Can I commit to full repayment every month?
   Anything less will turn into costly debt very quickly.
3. Do I have at least 3–6 months of expenses saved in an emergency fund?
   If not, you might rely on the credit card as a crutch.
4. Do I tend to shop emotionally or for stress relief?
   Cards can amplify those habits, even if they seem “controlled” at first.
5. Am I applying for a credit card to build credit—or just to feel more ‘adult’?
   Your reason matters. One is strategic. The other invites risk.

Credit cards aren’t essential for every Singaporean. But used with intention, they can support your longer-term planning goals—especially around housing, travel, or building a positive credit record. The trick is to use them for utility, not emotion.

Set low limits. Start with a single recurring charge you can pay off automatically. Treat your statement like a bill, not a surprise. When the habit is built around control and clarity, not convenience or cashback, you reduce the risk of debt and compound financial credibility instead. But remember: you don’t “level up” financially by having more tools. You level up by using fewer tools more effectively.

If you’re already saving regularly, budgeting well, and meeting your needs with debit or cash—there’s no urgent reason to change what’s working. The best financial decisions often feel boring. That’s a good sign. A credit card is not a milestone. It’s not a shortcut. And it’s certainly not a signal of success. It’s just one possible tool in a much bigger system. Use it if it strengthens that system—not if it complicates it.