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How to avoid late payment charges for credit cards like those issued by DBS/POSB, OCBC, UOB? (January 2024)
Credit Card Hacks: Avoiding late payments does not only save you from extra charges but can keep your Singapore credit score healthy.
SINGAPORE – Late payment fees are immediate charges imposed when your credit card issuer does not receive minimum payment by the payment due date of your billing cycle. For most credits cards offered in Singapore, the late payment fee is currently S$100 per card.
With the rising cost of living to consider, it is even more important to be smarter about how we manage our finances. Here's the lowdown on late fees and how you can avoid it.
How are late charges calculated on a credit card?
The late payment fee is imposed each month you miss a payment and on every credit card you hold that has outstanding balance. It is also fixed regardless of the outstanding amount — whether it is S$1,000 or S$1.
Understanding credit card late payment interest: What happens if you pay your credit card bill late?
If you miss your due date, you will have to incur a late payment charge. In addition, the credit card issuer – such as banks like OCBC, DBS/POSB, and UOB, who together may issue Visa, Mastercard or AMEX cards – will impose interest on the outstanding balance in your statement before you've made the minimum payment.
What this means: If you have an outstanding balance of S$3,000 due but you made the minimum payment of S$90 late, you will be charged the $100 late fee plus interest on the S$3,000 – not S$3,000 minus S$90 – until you have paid everything off.
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The minimum payment for credit cards is different depending on the issuer but is generally around three per cent of the outstanding amount, or S$50, whichever is higher.
2 ways to avoid late payments
Here two handy tips to avoid being charged a credit card late payment fee:
1. Set reminders for yourself
It is a misconception that credit card statements are only billed at the end of the month — it is crucial to remember that different cards have different billing cycles. For instance, some have a 25-day cycle while some follow a 30-day cycle.
If you have multiple credit cards, chances are, they all have different due dates, meaning there could be higher chances of overlooking a payment. Once you get an idea of your cards' exact billing cycles, set calendar reminders for yourself so you'll never miss a due date.
2. Automate payments
If you use credit cards just as a mode of payment to avail its perks (points, cashback, frequent flyer miles, and so on) and always pay back in full, try automating payments so you can avoid incurring late fees or interest charges. All you need to do is set up an intrabank or interbank GIRO payment schedule.
However, it is still recommended you check your statements at the beginning and end of each month to keep an eye on your expenses and make sure you're on top of your credit card bills.
Does late payment affect your credit score?
Your credit score is important in determining how much banks are willing to lend you should you apply for a loan. They use the score as an indication of how likely you are to repay debts, so a good score will likely enable you to access higher loan amounts, while a lower score means a smaller loan, or your application might even be rejected.
According to Credit Bureau Singapore, late payment falls under "account delinquency" and can reduce your credit score, so be sure to pay on time to keep it at a healthy range.
How to waive credit card late fee
Credit card issuers can waive late fees on a case-by-case basis. You may apply to have your late fee waived by using the credit card issuer's automated services either via phone or the respective mobile application, or by calling in and chatting with a customer service officer.
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