Singapore Profit

I’ve always dislike having ready credit or cashline attached to my bank accounts. I had a bad experience when I bought my car. I was given a card which looked like a credit card from Citibank 4 years ago, and I wanted to put the downpayment of $5000 on my card. Instead of using my credit card, I thought it was the same using that card, so I charged $5000 to my ready credit instead. This meant that I had to forgo my credit card points, and worse still, I had to pay interest on that $5000 without knowing. Hence, when I received my bill, it was many days after I had signed my card, and I incurred quite a hefty sum of interest. The worst thing was for every day I waited to pay my bill, I had to pay even more, so I had no idea how much I owed the bank. Immediately, I had to get my father to write a cheque, since I did not have a chequebook, and go down to the bank to pay my bill. In my anger and frustration, I cancelled this facility immediately after I paid the bill.

A few years later, as I applied for more credit cards, DBS and Citibank, among other banks offered me the same credit lines, so I just left it there without touching them. I refused to spend beyond my means. It turned out that having such a credit facility was really useful in emergency.

I had opened my shares account with Phillips Securities at http://www.poems.com.sg recently and purchased my first shares a few days ago. It took me some time to learn how to use all the functions and I had a great mentor to guide me.

I didn’t know how to pay for my shares, so I asked my colleague, who was also a great investor, who told me to use EPS, or Electronic Payment System. I still had some problems figuring out how to key in the reference number, and tried numerous times. In the end, I called my broker, who patiently explained to me how to pay. Instead of using Bill Payments, I should click on Investment-EPS.

As a lot of my money was tied up in unit trusts and fixed deposits, and I had some large payments to settle in the month of June, I faced a cash flow problem with the account I had linked to my Phillips trading account. The cheque I was waiting for took some time to come, and I missed the 3pm deadline for banking the cheque. In addition, a cash transfer from another bank required 2 days, and I could not transfer cash to my account in time. However, I had to pay the bill because I had waited too long, for the company could force sell my shares if I did not pay up. I had T+3 days to settle the bill. Hence, I decided to transfer some money from Cashline to my savings account. It was a tough decision because of my prior experience. In addition, I simply hated the idea of paying interest.

Fortunately, the Cashline transfer was automatic with Internet Banking, so I did not have to wait an additional few days to get this done. I paid my bill and solved my immediate problem. However, I still wanted to avoid paying interest. The very next day, I deposited cash into my account, and paid my bill for Cashline immediately. There was a time lag, so I still owed that amount on the screen. Thankfully, when I checked my account today, the credit line was ok, and the best part was I did not have to pay a single cent on interest.

In conclusion, I still stand by what I feel about not using such ready credit lines because of interest and the risk of living beyond my means, but it is a great tool to use in times of emergency. Tools should always be used by us for our good, and we should not be led by the nose by these tools.

Sarah Tan – SingaporeProfit.com

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