Yahoo Finance Air Miles vs Cashback vs Rewards – Which is the Best Credit Card Type to Use?
Picking the right type of credit card is more of an art than a science. It’s like choosing your Dungeons & Dragons character or starter Pokemon. In fact, just like Bulbasaur, Charmander and Squirtle, there are 3 major types of credit cards in Singapore – air miles, cashback and rewards.
So, deciding between miles vs cashback, cashback or rewards, or if collecting miles is worth it?
First, you have to understand how each one works, and their respective pros and cons. In the end, only YOU can say which one is most suitable for you.
Cashback vs air miles vs rewards cards at a glance
Credit card type | Pros | Cons |
Cashback card | Get rebate in cash (not vouchers). Good for predictable expenses. | Be careful with minimum spend & cashback cap |
Air miles card | No minimum spend, minimal T&Cs. And who doesn’t want FREE flights? | Earning miles can be quite slow if you don’t spend a lot. It costs money & time to convert points to miles. Watch out for miles expiring |
Rewards card | Generous bonus points for frequent spending categories (e,g. shopping) | Some rewards catalogues suck. Watch out for bonus rewards caps & points expiring |
Cashback credit cards in Singapore – who are they for?
A cashback credit card gives you cash rebates that are linked to your spending. That means a small percentage of your total spend is automatically credited back to you – effectively, a discount off your next credit card bill.
The most basic kind of cashback card has a standard rate (sometimes known as basic cashback or base rate) for calculating the rebate. This number starts from around 0.5% but can be as high as 1.5%.
Of course, even 1.5% sounds rather puny. To entice customers, banks now issue all sorts of cashback cards with meatier bonus cashback rates of up to 8% for spending in specific categories (e.g. dining), with specific companies (e.g. Grab) or in specific circumstances (e.g. on weekends).
Note that many of these enticing rebates also come with all kinds of terms & conditions, most prominently minimum spend requirements and/or cashback caps.
Pick a cashback credit card if…
You can’t be bothered to redeem points
Cashback credit cards are ideal for lazy people – as long as you pick one that fits your spending habits perfectly. Pick the perfect card, and you won’t have to tax your brain too much or fiddle with e-rewards catalogues.
Since the rebates are automatically calculated and credited, the whole endeavour should look like this:
Step 1 – Use credit card as per normal
Step 2 – ???
Step 3 – PROFIT
Use an unlimited cashback card like Standard Chartered Unlimited Cashback Card with no minimum spend for hassle-free spending. You earn 1.5% cashback on all local spend.
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Standard Chartered Unlimited Cashback Credit Card
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Valid until 31 Mar 2022
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Key Features
Flat 1.5% cashback rate for all eligible purchases
No cashback cap and no minimum spend
2 year annual fee waiver
Up to 22.61% fuel savings at Caltex
Your spending is predictable
Most cashback credit cards have minimum spend requirements and cashback cap restrictions, meaning there’s usually a sweet spot where you max out on rebates.
It also means you don’t have to spend wildly to get the best returns. If you spend quite modestly, it’s going to take you forever to get air miles on an air miles credit card. Cashback credit cards, on the other hand, don’t require that kind of expenditure – as long as they have manageable minimum spend requirements. You don’t need to spend thousands of dollars a month to get decent returns.
Let’s say you charge your monthly household expenditure to your card, and it averages above $800 to $888. Then you should get good cashback cards like Citi Cash Back Card or Maybank Friends & Family Card and earn higher cashback rates on major categories like petrol, dining and groceries.
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Citi Cash Back Card
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Get S$350 Cash via PayNow OR a Apple Watch SE (worth S$419) OR a Nintendo Switch Gen 2 (worth S$469) when you spend a minimum of S$500 within 30 days! T&Cs Apply.
Valid until 31 Mar 2022
More Details
Key Features
6% cashback on dining, 8% cashback on groceries, petrol and 0.25% cash back for other retail purchases
Cash back is capped at S$80/month with min. spend of S$800/month
Up to 20.88% savings at Esso and Shell, and 8% cash back at other petrol stations
For retail spend less than S$800, 0.25% cash back is awarded for all categories of spend, no cap on cash back earned
Maybank Family & Friends Card
More Details
Key Features
Up to 8% cash rebate on all restaurant spends in Singapore and Malaysia
Up to 8% cash rebate on and data communication & online TV streaming
Up to 8% cash rebate on petrol and groceries including online gorcery stores spend in Singapore and Malaysia
Up to 8% cash rebate on selected shopping stores, contactless bus and train rides, taxi and all passenger transportation servcies such as Grab and GOJEK
8% or 5% cash rebate with lowered minimum spend of S$800/S$500 per month respectively. Cash rebate cap at S$80 per month
0.3% cash rebate on all other spend with no cap on cash rebates
3 years annual fee waived; spend min. S$12,000 per year to get subsequent waiver
You’re the slow and steady type
We’re not gonna lie – cashback cards aren’t the most exciting on the market. You won’t get a round-the-world trip to show off on Instagram, nor will you be able to go on a shopping spree with CapitaMall vouchers. If you’d rather have extra money in your pocket than such flashy rewards, then a cashback credit card is right for you.
On the other hand, you’ll definitely want to watch out for:
T&Cs that make you jump through hoops
Remember how we said cashback cards are good for lazy people? That’s not strictly true for ALL cashback cards. Some can get really complicated with many different tiers/categories and terms & conditions. The onus is on you to make sure the card will reward you for your ACTUAL spending habits. Otherwise you’ll either lose out on the cashback or, worse, end up spending more than planned just to qualify for the bonus tiers.
Think cashback cards are for you? Shop for the best cashback credit cards in Singapore.
Air miles credit cards in Singapore – should you get one?
If you read any travel websites, you have probably come across at least one proponent of “travel hacking” whose story goes something like “I flew around the world in First Class for free and so can you! Pay $9.99 for my e-book to find out how.” Before you buy that e-book – we’ll tell you how. Most of these lobangs involve air miles credit cards – sometimes known as miles cards or frequent flyer credit cards.
Basically, you are rewarded with air miles for every dollar spent on your card. This conversion rate is known as the earn rate. At the risk of sounding like a physics textbook, earn rate is sometimes measured in “miles per dollar”. (You’ll need to know the lingo if you end up running in air miles nerd circles.)
The numbers vary from card to card, but there’s usually a local earn rate (e.g. 1.2 miles per dollar) and a higher one for foreign currency spending (e.g. 2 miles per dollar after conversion to SGD). Bear in mind, though, that overseas spending incurs transaction fees.
American Express and UOB are the only credit cards that lets you earn KrisFlyer Miles directly. With all other miles cards, you earn the bank’s reward points (e.g. Citi Miles, DBS Points) which you have to convert later into miles. This typically costs time, money, and there may be restrictions on how many points you can redeem.
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American Express Singapore Airlines KrisFlyer Credit Card
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Valid until 31 Mar 2022
More Details
Key Features
Earn 2 KrisFlyer miles for every S$1 equivalent in foreign currency on eligible purchases during June and December each year, with no cap.
S$1 = 3.1 KrisFlyer miles for Grab Singapore transactions, capped at S$200 per month
First Year Fee Waiver of S$176.55
Receive 5,000 KrisFlyer miles upon first spend on card
Eligible with Apple Pay, Google Pay, Samsung Pay
There’s a lot of number crunching you need to do if you want to find the absolute best air miles credit card. In fact, cards that yield the highest miles per dollar may not even be marketed as an air miles card!
You know an air miles credit card is right for you if:
Cashback cards just don’t do it for you
Many air miles enthusiasts sniff at cashback cards. They don’t get what’s so great about getting a few bucks off your bill every month – how can that possibly compare to a glorious trip to the Maldives? If this is you, it’s a clear sign that you’re cut out for the air miles life.
I’m sure there’s some kind of neuroscience-meets-evolutionary-psychology explanation for this. Maybe the air miles people are descendants of hunters and the cashback people were once gatherers. In any case, sometimes your brain is set up a certain way and you just gotta roll with it.
You earn and spend a lot (or plan to), especially overseas
People with relatively simple lifestyles will find using a miles card excruciatingly slow. But on the flip side, miles cards totally work in favour of those who charge a lot to their cards – such as family breadwinners or frequent business travellers – or if you have big expenditures coming up – like a wedding or new home. Unlike cashback cards or rewards cards, there’s no cap on the miles you can earn.
Obviously, you love to travel
Air miles credit cards aren’t going to be fun for you unless you’re genuinely excited about travelling in style. I’m talking about flying Business Class to New York, that kind of thing. If you’d rather stay home and read a book, then you’re not going to be very motivated to earn points.
But watch out for:
It can take a long time to earn miles
Unless your lifestyle is pretty ballin’ or you have to foot the bill for your hideously expensive wedding (I mean, the most beautiful day of your life), it will probably take you a long time to earn enough miles for that coveted flight to Paris. If you have your heart set on that, choose a card whose miles don’t expire, and be prepared to really play the long game.
You’ll need to do quite a bit of admin
Using a miles card sounds really glamorous and effortless, but the truth is that there’s a whole lot of PhD-level nerdery involved. Because there are so many different programmes for earning air miles, it is crucial to check out the fine print on your miles card. Important details like expiry dates, redemption costs, redemption lead time, etc. are significant because you’ll need to bear them in mind constantly to manage your miles. You really do not want to have your hard-earned miles expire on you!
Think air miles cards are for you? Here are 2 entry-level air mile credit cards to consider with great welcome bonuses:
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Citi PremierMiles Card
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Get S$350 Cash via PayNow OR a Apple Watch SE (worth S$419) OR a Nintendo Switch Gen 2 (worth S$469) when you spend a minimum of S$500 within 30 days! T&Cs Apply.
Valid until 31 Mar 2022
More Details
Key Features
S$1 = 1.2 Citi Miles on Local spend (no min. spend)
S$1 = 2 Citi Miles on Foreign currency spend
Annual Fee Applies
Earn 10,000 Citi Miles upon renewal of annual membership and payment of annual fee
Citi Miles never expire
Priority Pass membership gives you access to more than 600 airport lounges twice a year
™ Priority Pass membership is on application basis and is reserved for the Principal cardmember only, limited to 2 complimentary visits per calendar year
Complimentary Travel Accident Insurance up to S$1,000,000 coverage, Medical Assistance Programme and Travel Inconvenience Coverage
S$1 = 3 miles* on spend on eligible-travel related purchase spend (Min. spend S$2000 per calendar month of Nov and Dec 2021, eligible travel-related purchases must be charged in the same calendar month)
SMS PM3MILES to 72484 (e.g. PM3MILES 1234) to enroll
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Earn Miles That Never Expire
DBS Altitude Visa Signature Card
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Staycay, Shop or Dine with S$400 worth of Marina Bay Sands Gift Certificates or get S$300 Cashback with a min. spend of S$500 within 30 days of card approval! T&Cs apply.
Valid until 31 Mar 2022
More Details
Key Features
Base earn rate: 1.2 air miles per S$1 local spend
Base earn rate: 2 air miles per S$1 overseas spend charged in foreign currency
Shop for the best air miles credit cards in Singapore.
Rewards credit cards in Singapore – what’s the point?
Rewards credit cards is a very broad term – almost every bank gives “rewards” points for every dollar charged to your credit card. The points can be accumulated so you can redeem stuff – shopping vouchers, gifts, and even air miles.
These cards are set up with rewards points systems with a standard rate, for example $5 = UNI$1 or $1 = 5 STAR$. But that’s not enough to entice customers, so banks also throw in sweeteners like “10X rewards on online shopping / Apple Pay / [insert consumer behaviour here]”.
Now, that’s the real reason to get a rewards card. These multiplier or bonus points let you rack up the points a whole lot quicker, as long as they fit your spending habits.
Many rewards credit cards come with expenditure caps – you’ll only earn rewards up to $1,000 a month, let’s say – so keep that in mind. If you’re planning to incur huge expenses then you might end up “wasting” some of your money.
So who should get a rewards card?
You want air miles but don’t travel/spend that much
If you’re a regular Joe spending below $1,000 a month, then it’s well worth considering a rewards card as your main credit card. Pick one with bonus points for the right categories, and you can actually earn miles much more quickly than with a miles card. Plus, you have the flexibility of deciding whether to redeem air miles or vouchers eventually.
In fact, many miles chasers pair their miles card with a rewards card – the latter is for their day-to-day frequent spending categories (e.g. dining or shopping), while the miles card is used as a “catch-all” for random expenses and travel-related ones.
But watch out for:
Credit card rewards catalogues and T&Cs
Don’t think that just because you have the highest earning rewards card, you’re all set. You need to check out the rewards catalogue and see if there’s anything you actually want before you start using the card. If you’re after air miles, that’s fine. But what if the catalogue only has stuff like Mothercare vouchers, and you’re single as can be? Get a sneak preview of the rewards catalogues in Singapore here.
Think rewards cards are for you? Shop for the best rewards credit cards in Singapore.
Currently, there’s a $350 instant cash via PayNow promotion for Citi Rewards Card. Valid until 31 Mar 2022. Apply now:
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Citi Rewards Card
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Get S$350 Cash via PayNow OR a Apple Watch SE (worth S$419) OR a Nintendo Switch Gen 2 (worth S$469) when you spend a minimum of S$500 within 30 days! T&Cs Apply.
Valid until 31 Mar 2022
More Details
Key Features
10X Rewards on all online purchases (excludes travel-related transactions). Bank's T&Cs apply
10X Rewards on Ride-hailing, Shopping and Online spends. T&Cs apply
10X Citi Rewards program gives you an additional bonus of 9X Rewards points per S$1 spend on eligible categories on top of the base rate
10X Rewards capped at 10,000 Points per statement month and expires every 5 years
Conclusion: Which credit card should you choose?
There are so many factors that come into play when you’re picking the right credit card. There’s your annual income and spending habits, of course, but there’s also stuff like your personality, what you value, how you prefer to be rewarded, how much time and energy you want to devote to your credit cards.
Only you can decide which type suits you best.
But if you’ve made it to the bottom of this article, you would probably have a better understanding of the 3 major types of credit cards in Singapore – and with luck, one of them might intuitively appeal more to you.
Which starter credit card will you pick? Tell us in the comments!
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Original article: Air Miles vs Cashback vs Rewards – Which is the Best Credit Card Type to Use?.
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