Why I don’t own a credit card… and will never need one

SINGAPORE – I have never had a credit card, because I am uncomfortable with the idea of spending money that I actually do not have.

When I make purchases, I want to do so with the knowledge that they have been paid for. This applies even for bigger expenditure, such as my membership at True Yoga, now Yoga Edition.

About 10 years ago, I paid a lump sum of around $12,000 to be a permanent member of the yoga centre. 

No, I am not rich or impulsive. I made sure that I had enough of a cash buffer before I forked out that amount. 

To me, the money was well spent, as I was making an investment in my own health and mental well-being.

Peers tell me that I can get cashback, and earn points, air miles or rewards when I spend using a credit card. Some cards also have promotional discounts that card holders enjoy when they make payments.

I do not chase rewards or discounts, as I find it a bother. 

For example, when I go to a restaurant, I do not actively seek out the perks such as a free dish or a 10 per cent discount on the meal if I use a certain credit card. I want to be able to decide what I wish to eat that day, and it may not be that free dish.

Other peers tell me a credit card will come in handy when I travel as I won’t have to carry stacks of foreign currency with me.

Well, I am no globe trotter. On those occasions when I had to travel overseas in my previous job, I got by with my one and only debit card and an envelope of foreign currencies.

In fact, physical cash was still the main mode of payment in many places that I went to, such as Myanmar and the Philippines.

I also found out recently that my DBS Multiplier account is a multi-currency one that can be my travel wallet once I link it to a Visa debit card. I can transact in 12 currencies, including the Thai baht, the Japanese yen and the US and Australian dollars.

I was pretty sure that I am among the minority in Singapore who do not have a credit card, so I was pleasantly surprised when I found that accountant Mrs Lai – who prefers to be known by her married name – thinks like me.

Mrs Lai, who is in her 50s, says she has not applied for any credit cards because she wants to avoid the risk of mismanaging them and end up incurring interest charges on late payments.

A debit card allows her to spend only what she has in her bank account. This eliminates worries that she will owe others money or fall into debt. She has two debit cards, making it is easier to monitor her spending.

I could not resist asking Mrs Lai if she shops online. I had always wanted to do so because of the convenience and the deals, but I have the nagging fear that my debit card details could be stolen. 

Mrs Lai says she enjoys shopping online and uses her debit cards for purchases, but she sets spending limits and is notified when transactions are made.

“In case my card details are stolen, I will notify the bank right away to lock the card and raise a dispute over the unauthorised charges,” she adds.

Mrs Lai says her daughter, who is in her early 20s, also prefers to use a debit card.

“We have discussed this topic before,” she adds. “I will leave it to her to decide whether to use a credit card. However, I will also explain the pros and cons to her.”

Mr Ray Zheng, client adviser at financial consultant Providend, says a debit card is suitable for those in tertiary education or who are still in school.

“They cannot spend future money. That is a good discipline,” he notes.

“I noticed that for my nephews and nieces, if they spend from their debit cards, they are very sensitive to how much they are spending.”

All these discussions leave me room to ponder how I will approach the issue of cash and cards with my daughter, who is entering Primary 1 in 2025.  

I think it is important to introduce her to physical cash first so she learns to appreciate that money is finite and that if she overspends on candy or stationery – her favourite stuff – she will have less for other items.

I will consider introducing the debit card to her when she is older, but only when I am confident that she can manage her money and keep to a budget.

I will also set daily spending limits to ensure she does not splurge all her cash.

Children in Singapore must be at least 16 to apply for a debit card with DBS/POSB or UOB. OCBC introduced a debit card for children as young as seven in October. The minimum age to apply for a credit card is 21.

I have decided I will follow Mrs Lai’s example and let my daughter consider for herself if she will use credit cards in the future.

The important thing is that she needs to understand that money will not last forever and she has to spend within her limits.