Singaporeans are affluent and busy people. Many times, we end up either not having time to check through our bills or just trusting that everything is in order. The matter of the fact is that service providers, existing for the sole purpose of profiting usually, will always be incentivised to work in fees into their packages to ensure they extract the maximum value from a customer.
Checking our bills every month may be hasslesome, but it take a few short minutes. Further, the accumulation of fees adds up to a substantial amount if gone unchecked for long periods.
Here are four types of common fees that every Singaporean will face at some point of their life.
1. Credit Card Fees
Credit cards have been created to keep people in debt and spend more than we can. Without doing so, credit card companies will never be successful. So working in additional fees and creating “better” features will only ever serve to keep you in debt. With that being said, here are some credit card fees to watch out for
i. Annual Fees
Credit card companies charge annual fees to ensure anyone not keeping tabs on their spending will automatically lose reward points or actually pay it as part of their monthly payment to the company.
ii. Late Payment Fees
They also have strange ways to compute which day you have to repay your bill by. It’s never the same so be sure to look at the due date and pay your bills before then. Interest charges are scary at over 24% and this does not even include the late payment charge.
iii. Delayed Payment Fees
Many credit cards offer its customers the option of only having to pay $50 or a certain percentage of their bill each month. What customers do not know is that fees have been built into this method of payment either through preferred interest rates (which are still scary) or a processing fee which is charged as a percentage of the amount. These fees are also applicable when you transfer balances from another card.
2. Banking Fees
The lines are a bit blurred when I mention banking fees since most banks also offer credit cards. But we’ll stick to pure banking fees here. So in addition to the fees they collect on credit cards, banks also profit through these other fees.Minimum Amount Fees
i. Minimum Amount Fees
Many banks require you to keep a minimum balance, usually $500, in your account each month. Failing to do so will activate a fee of approximately $2. However, this is for savings accounts, note that there are also minimum fees for current accounts that require much higher fees and much higher minimum balances.
As a side note, some current accounts also charge fees for their cheque books.
ii. Short Term Borrowing Fees
Advertised as a quick and easy way to get instant cash, often within a few hours of application. Fees for such are very prevalent and are in addition to the interest rates charged.
3. Early Termination Fees
Once a company has tied you down to a contract, you can be sure they will fight tooth and nail to make you pay for it. Even when we experience the shameful Singtel TV outage, we had to continue paying for the service. And their discount was given on goodwill rather than an obligation.
We’ll leave the debate on how fair this system is, and how big companies can bully consumers without the government intervening. And when the government intervenes, you’ll know that the situation has really been atrocious.
Insurance companies are another financial institution that exists only to profit. They profit by offering consumers insurance, this is not a public service they are doing, they are profiting, and if they don’t do it, someone else will. Of course then, once you sign a contract, usually for the next quarter of a decade, you’re pretty much locked with them.
At this point, it should be highlighted that we think you should think hard about any decision regarding insurance when you sign up. It will affect you for a very very long time.
As mentioned in the opening paragraph, you can’t back out even when you’re being offered a terrible deal. You’ve signed up for it. This is far more acceptable, or so people think, because it only locks you up for 2 years at a go. Nevertheless, you should consider your decision carefully before signing up. There are always other options, like not watching TV and being more productive and using pre-paid cards.
Another way banks can earn money from customers. The logic is that banks have already “locked in” a certain amount of interest income that you will pay them, and if you want to back out, you have to cough up for it. This is actually the most fair of the fees they charge. Nevertheless, it’s an additional fee for us to consider when determining how fast or slow we can pay back our mortgages.
iv. Almost Anything Else
Same logic applies. When you sign up for a deal, you’re going to be held ransom to that signature. Think before signing for any service. Some common ones are gym membership.
4. Convenience/ Booking Fees
This type of fees is cringe-worthy, mostly because it’s term “convenience” when most consumers are being inconvenienced.
i. Movie tickets
There are ways booking fees when booking tickets online or through mobile apps. Golden Village ($2), Filmgarde ($1) and Cathay ($1.50) all have these fees.
ii. Budget Airlines
Usually ranging from $16 to $20, these fees put additional revenue in budget airlines’ pockets for seemingly no reason whatsoever. Some, like Jetstar, offer free payment options via Singpost or 7-11 outlets. We say, why not reward the airlines that offer better deals for their customers. Help them make up for it with greater revenues. They deserve it.
iii. Many Other Services
We can list down everything under the sun, but the basic premise is that service providers will try to take more money, every possible way, this includes services offering you convenient methods to top up your EZ link card via mobile apps or with credit cards (under $1).
You will have to decide for yourself what fees are acceptable and what fees are not. If you ask us, we will try to cut out all the fees, as the additional headache will be rewarded in the form of huge savings over our lifetimes. Sometimes, all it takes is a phone call, and other times, we have to be a little more firm. Regardless, we think everyone can adjust their lifestyles to not have to pay these kinds of fees.
Listen to our podcast, where we have in-depth discussions on finance topics that matter to you.