Sunday, July 05, 2009
I managed to settle some work that came with the start of the term, and left relatively early for driving lessons at 3.30 pm. Today was my first time at the circuit, and I found it quite fun. Of course, it wasn't as stressful for me since I was learning auto, as my wife was quick to point out the agonizing control of gear and clutch in the S-curve and Z-curve and whatever else.
My wife and I were somewhat unhealthy today, and we ordered a late night supper from Mcdelivery. The oddest thing was that the delivery boy got the order wrong. I didn't realize it because he got the drink (iced milo) right, and that was the one in the transparent bag. The rest of the order, which was the food, was wrong. I had ordered a Fillet O-Fish upsized, added with an apple pie and cinnamon melts, and what was in the paper bag was a McChicken meal and a McSpicy meal, with two apple pies. Technically I got more than I paid for, but seriously, neither my wife nor me wanted either burger, so it was a filling but agonizing supper.
Tue 30 Jun
I was in school doing some work and preparations for next week. For lunch, a bunch of us headed down to Old Airport Rd for lunch. I had the staple Whitley Rd Prawn Noodles, and a durian goreng. I wanted dessert originally, but my favourite Blanco Court one was closed for the day. My wife and I left school in the mid-afternoon and went to spend some time with Jadon before going home to do a bucketload of chores.
Wed 1 Jul
This was one heck of a long day. I had visual screening duty in the morning, so I was in school at 6 am. I did the duty till about 7.45 am before I went back to the staff room to do some work. For lunch, we headed out to 216 market. I went with one group of colleagues, and ate a bowl of you mian and a bowl of laksa. Another group of colleagues came later, but because one of them had to rush back, I swapped places with her, and went back later with the other group.
By right I was supposed to invigilate my own Year 2 chemistry paper, but I was assigned to be on one of the panels for the interviews of next year's potential TA students. That took up my time from 2.30 (one hour for pre-discussions) till 7.30 pm! Some of my colleagues wanted dinner, so we went down to Siglap to grab some nice chicken rice with zi char dishes. The colleague who drove, my Magic the Gathering kaki, gave me a ride down to Bukit Merah, so I was able to join my pastor for cell meeting when worship was almost over, and the whole thing took till 10.30. My pastor graciously drove me back to Bedok, so I ended my day at 11 pm. I was barely awake by then, especially considering the sleep debt owed.
Thu 2 Jul
I have been supporting the Good News Cafe which newly opened on college campus by buying the ice-blended drinks, which at $2.20 were pretty decent. Lunch was a treat by some colleagues who were promoted earlier this year, and they brought in Rite Pizza, which served decent pizza (I found the ingredients too little on the pizza though), and interesting sides like samosas, prawn rolls, spring rolls and chicken wings. They also bought shepherd's pie from one shop from Sempang (is that how you spell it?) Bedok, which was delicious!
In the evening, I headed down to Bedok Camp for remedial training, and again we ran a total of 2.8 km in addition of many other exercises. I wonder if I'm losing weight through all this. Hmm.
Fri 3 Jul
It was good that I finished marking yesterday, so I spent the time sorting out some administration, and for lunch, my colleague felt like going somewhere different, so I brought them down to Downtown East to eat at Mr Chicken Rice. After that, we bought the creamy ice-tea from the basement Chipshop which was still fabulously rich, before heading back to college for invigilation of the Year 1 chemistry paper. The TA 1 chemistry papers ran concurrently, so I wanted to start marking after I was done with invigilation, but I decided to bring the scripts back to mark. In case I didn't have time to mark over the weekend, I marked the scripts till about 1 am in the morning.
Sat 4 Jul
My wife and I went over to my in-laws' place quite early to spend time with Jadon. For dinner, we went to the newly renovated Kopitiam next to Bedok library to eat at Astons Express. My wife had the grilled fish with herbs and I had a prime ribeye xtra cut. The food was good, but the drinks at the coffee shop suck. Big time. I ordered barley, which looked like murky water. It was awfully translucent to the point of almost being clear, and it tasted extremely diluted. To give the drinks stall a second chance, I ordered iced milo, and it was about two-thirds ice, and one-third not even thick milo. If I ever eat there again, I will order a canned drink and nothing else.
Sun 5 Jul
My wife was still sick, so I made my own way down to Simei. I ate my favourite fishball noodles at the NTUC foodcourt for breakfast and took the shuttle bus to church for service. After service, I rushed off with my cell, and we headed down to Bedok interchange for lunch. One of my boys, Junhui, was having a magic performance, and he asked for us to go and support him, so we did. He told me the show was at 1.30 pm, so since I thought we'd be late, I took a cab there.
When we got to the address, I was confused, because we could only find some big Malay-styled event setup at the void deck. I verified with Junhui's friend, and we were indeed at the right place. So we hung around, not knowing where we were. Someone came to us and asked us to take a seat and help ourselves to the food, but we already ate. In the end, the show started at 2.50! Inbetween it felt like racial harmony day, and we listened to the Quran scriptural reading, the traditional Malay singing (don't know how to describe it otherwise...), and a Silat performance. We felt extremely out of place. The feeling was only mitigated by the fact that there were many other Chinese people around, and it looked like they were there for the free food. Only later I found out that the event was actually a celebration of the birthday of the prophet. Anyway, after catching Junhui's performance, which had some minor glitches but otherwise went well and was well-received, I took a cab down to Bedok Camp for another round of Remedial Training.
Friday, July 03, 2009
Make Credit Cards Work For You!
A layman’s guide to credit cards by Low Kian Seh.
Despite reports of soaring bank debts and bankruptcy due to credit card debts, in all seriousness I have to say that credit cards are wonderful and only benefit the consumer – if you know how to make them work for you.
1. BENEFITS OF CREDIT CARDS
So why apply for credit cards? First thing you should know is that the banks want you more than you want them. If you get a credit card from them and you spend, they earn, and the best thing is that they don’t actually earn from you, unless you are unwise. I’ll talk about that later. Then what is in it for you?
Sign-Up Perks / Recommendation Perks
This is the most immediate and visible benefit. As I stated earlier, the banks want you as clients. Hence, many banks dangle a carrot before you in the form of cash, vouchers, free gifts such as watches, bags and accessories. Some companies offer rewards for recommending others, so you can always rope in people to get more good deals. However, this should not be a main consideration for the usage of the credit card, as many people sign up, get the freebies, and when the annual fee is next charged, they terminate the card (if they don’t use it). Of course, take note that the banks do keep track of your records, so they may have terms and conditions if you were to sign up for a new card with them at a later time.
Discounts and Promotions
This is the most prominent benefit that a credit card brings. Many retail merchants and F & B (food & beverage) establishments have discounts with certain credit cards or banks, and have promotions from time to time. There are two kinds of discounts and promotions: seasonal and permanent.
Seasonal discounts happen for a short time, which can range from days to weeks to a couple of months, especially the Great Singapore Sale (GSS). Permanent discounts and promotions are usually for merchants which have long-term cooperation with the banks, such as petrol companies, or if the credit card is launched in collaboration with some particular company. Some examples are Tangs, Robinsons, Ikea, Singtel, SMRT, and etc.
Discounts can range from 5% upwards, and can be quite attractive. Promotions can come in the form of lucky draws, vouchers awarded for a certain amount of spending, redeeming movie tickets, and etc. As a general rule of thumb, if you are in doubt, just ask the cashier or waiter if there are any credit card promotions, and you can check if you have the right card for the purchase or payment.
Points and Rebates
This is a big bonus for credit card holders. Aside from discounts and promotions, most credit cards either have a point-system or rebate-system to manage rewards for your spending. The more you spend, the more points or rebates you earn. Now this is the part where mathematics come into picture. Now most credit cards use the point-system. They can name it any other name, but as long as you earn points with your spending, and you can use the points to redeem gifts or vouchers, that is essentially a point-system.
In general, the points are earned at a rate of 1 point per $5 of spending. There are some variations on this, but that seems to be the ‘market rate’. Sometimes, there are promotions during certain periods of time that you can earn more points with your spending, but that depends on the banks. Anyway, the usually redemption rate seems to be pegged at $10 voucher per 500 to 750 points across banks. So after crunching the calculators, essentially, you get $10 back for every $2500 to $3750 of spending. That works out to be a return of 0.27% to 0.40% of what you spend.
Now the other system is a rebate-system, and the credit cards that offer this are fewer in number. Usually the rebates are tiered and tied to the kind of expenditure. So you may have a different percentage rebate for petrol as compared to dining for instance. Generally, the rebate is 1% onwards for participating merchants, and can reach as high as 5%, and at the lowest, it is about 0.5% for all other expenditure. If you compare that with my number crunch earlier, it is quite obvious that in general, the rebates are worth more than the points.
Use this as an evaluating criterion, and soon you can figure out what cards are more worth using when you pay for stuff in the long run. Of course, do take into account the earlier part about discounts and promotions, and you will become a wise spender.
Interest-free Installments
This is a lesser-known benefit, but it is deserving of mention. Typically, the installment plans stretch for 6, 12, 18, 24 or even 36 months. One thing to note is that the term ‘interest-free’ is misleading. If you calculate what you pay for the instalments, it is true that there is no additional charge of interest. However, if you work backwards, you will realize that the merchants would have worked the interest that would otherwise be charged into the retail prices.
However, do recognize this: even if you don’t take installments, you are also paying extra, so why not? The usual drawback is this though: when you pay for something by installments, usually you do not earn points or rebates with the purchase. Why do I consider this a benefit? Well, there are times when you may be cash-strapped and this becomes important. Of course, the price is probably higher than another shop that does not offer installments, but only you will know how much liquidity you need to have. I think the most common use of this will be taking of facial/slimming packages, electrical appliances and other costly purchases.
Special and Specific Benefits
This is a more recent thing as Platinum cards are being pushed across banks. Special benefits would be travel perks, which can range from airline, travel package or hotel stay discounts, and membership to certain establishments. Common ones include golf courses and fitness centres. Some cards offer unlimited access, while others have a restriction on the number of times you can access these places for free each month.
2. THEN HOW DO BANKS MAKE MONEY FROM CREDIT CARDS?
This should be the burning question, since it seems to cost you nothing but you get a bucket-load of benefits. This is an important question, because once you understand this part, you will learn how to make the credit cards work for you.
Bank Charge on Merchants
This is the part that most people are unaware of, and is the main source of income for the banks. Every single transaction that a merchant makes via credit card is charged a certain percentage of the purchase by the bank. The value of that percentage may vary, but it is, I think, in the vicinity of 5%. So the larger the purchase, the more the bank earns from it.
Now, similar to the interest-free installment section, the merchants would have incorporated this hidden cost into the retail price as long as the merchant accepts credit card usage. Hence, the prices are already adjusted higher to account for this extra cost. This is an important point: if I phrase it in another way, this means that if you pay by cash when credit cards can be used, you are paying extra and giving the shop more profit! Not to mention that you lose out on the points or rebates that you could have earned. Therefore, use your credit cards whenever possible!
The only exception is this: when the shop accepts credit card usage, but charges an extra percentage on the sale if a credit card is used. The best example of this system is in Sim Lim Square. Most of the merchants there can offer lower prices than other places because they do not adjust the pricing to incorporate this charge. Therefore, if you pay by cash, it is a lower cost than if you pay by credit. So unless you can get a 5% rebate with the purchase, it is safe to assume that it’s better to not pay by credit in this case.
Interest Rate and Late Charges
Interest rate is charged on the remaining amount whenever a credit bill is not fully paid. Usual interest rate for credit cards is 24% per annum, but that does not work out to be 2% per month apparently, and the interest charge is quite hefty if you have an unpaid balance in thousands.
Late charge is the penalty fee if you missed the deadline. With every month’s bill (usually on a fixed day for each bank), there is a date to make payment by. If you miss the payment, there will be a fee charged, and it can range from roughly $40 to $60, depending on the bank.
Annual Fee
This is an annual subscription charge for the credit card, and can range from a low of $50 thereabouts to above $200 depending on the prestige and benefits of the card. Some cards come with lifetime fee waiver provided you exceed a certain amount of annual expenditure, and some cards come with free annual fee waiver for the first few (1 to 5, depending on the credit card) years.
3. HOW DO WE MAKE THE CARDS WORK FOR US?
The benefits listed in the first section are there for the taking, and does not cost us anything at all. The second section lists the way the banks make money. Now the bank charges on the merchants have no effect on us except for the specific cases I’ve mentioned, so how do we circumvent the charges that do affect us?
Use your Credit Card as Often as Possible
Whenever you are going to pay for something, check if the merchant accepts credit card payments with no extra charges. If a credit card can be used, check if there are specific credit cards with discounts or promotions and use those. If not then use the one that benefits you the most, be it in terms of points or rebates. Getting some money or vouchers back from all that you spend is a satisfying thing.
Don’t Spend Beyond your Means
This is the most important point, which many people miss and thus abuse their credit cards. Now after mentioning all the benefits in the first section and the previous point, I need to clarify this: I am not advocating wild heedless expenditure to chalk up points, rebates or get freebies. I am advocating that you maintain your lifestyle and spending, but just ensure that you use your credit card to make payments whenever possible. If you do this, you shouldn’t end up in a case when your bill is beyond what you can pay and you are bound to incur interest. If you end up needing to make a big purchase, then consider taking interest-free installments to split the cost over several months so that you can manage.
One common option for people who spend beyond their means is to do a balance transfer. While this option is good if you are already in credit card debt, the best thing you can do for yourself is to follow what I advised earlier and don’t put yourself in such a position. Balance transfer is a facility that most banks offer. Essentially, it takes over your debt to another bank. For instance, if you owe bank A $5000 this month, bank B may offer you a balance transfer. If you do the balance transfer, what happens is that bank B pays the $5000 on your behalf, and you no longer owe bank A, but now you owe bank B the same amount. What banks do to make this option more pleasant is to offer a lower interest rate than what you would have paid. The hidden ‘benefit’ for the consumer is that you end up delaying your debt repayment by a month (the month that you do the balance transfer). This only helps if you actually can make repayment the following month, and if you can’t, there are only so many banks around that you can transfer the debt around. The people that you commonly read about going bankrupt due to credit card debt usually use balance transfer to shift the debt around, but still continue to rack up expenditure rather than save to pay the debt off.
So the point is: don’t spend beyond your means, else no benefit that the credit card can offer can make up for the extra charges incurred.
Be Punctual with your Payments
This sounds obvious and simple, but can be a tricky thing if you are hanging on to several credit cards. An easy way is to set monthly reminders for bill payments, since there is a fixed recurring date each month for each bank. A better option is to fix payment by GIRO. Every bank should have a GIRO application form, and the credit card amount you owe will be deducted directly from your designated bank account. Note however that you must ensure sufficient funds in the account, because if you don’t and the payment fails, you will be charged a late fee, interest, and also an administrative fee for the failed GIRO deduction. And if you follow the previous point and spend within your means, you shouldn’t find yourself with a failed GIRO deduction.
If you always pay on time, you will not be slapped with extra cost. However, if by some chance you fail to make payment punctually, do not worry. Most banks want your business, and you can just make a call to the bank, speak to the customer service, explain your situation of why you missed the payment, and if you usually have good payment habits and records, generally they will waive the charges if you ask nicely.
Annual Fee Waivers
Other than the annual fee waivers that come with certain cards or promotions, you can always request for a fee waiver anyway. As I stated, most banks want your business, and if you call in and ask nicely for a fee waiver when you see it charged to your bill, generally the banks oblige, depending on how badly they want your business. The rule of thumb is: if you are spending regularly with that card, most probably they will grant you the waiver (and they continue to earn from the merchants you spend at). If you don’t use that card often or at all, then it depends on the bank. Some will not offer a waiver, and others may offer a conditional waiver, i.e. they request that you spend a certain amount or hit a certain number of uses, and they will remove the waiver.
Do take note that some banks have a practice of deducting the annual fee from your points (if you chalked up enough) by default. The easy way to circumvent this, of course, would be to redeem what you want with your points before the renewal month so that the points would be too low to deduct from, or if the bank has deducted already, once again call in and ask for a fee waiver and request that they return you the points, but this request often doesn’t get entertained.