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How to decide on the best cashback credit card in Singapore for your needs (2023)
Credit Card Hacks: With so many cashback credit card options in Singapore, how do you choose the best one for your lifestyle?
SINGAPORE — At a time when everyone feels the rising cost of living, finding ways to save money on everyday expenses is essential.
One method of doing that is through the use of cashback credit cards. Apart from the convenience and versatility that comes with using a credit card, a cashback credit card would enable consumers to increase their cost savings by rewarding them with direct cash rebates on their expenses.
What is a cashback credit card?
A cashback credit card is a type of credit card that rewards cardholders with a percentage of their spending as cash – hence, "cashback". Unlike credit cards that offer rewards users in the form of points or miles, cashback cards return a portion of the expenses that you charge to the card. Think of it as getting a discount on purchases. Cashback credit cards are a popular choice for consumers looking to maximise the value of their everyday purchases.
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How does cashback work on a credit card?
For every transaction made using a cashback credit card, a cardholder receives a percentage of the amount spent as cash back to his or her card account. This is usually reflected in the monthly credit card statement. The cashback rate varies depending on the credit card issuer and the spending category.
For example, a card may offer 1.5 per cent cashback on general spending but five per cent cashback on dining and groceries. This means that if you spend S$1,000 on dining and groceries, you will receive S$50 as cashback.
Best cashback credit card in Singapore
There is no one-size-fits-all cashback credit card that can be crowned as the best, as the most suitable credit card varies from person to person. This is because every individual has different spending habits and financial goals.
Here is a brief look at some of the cashback credit cards offered by the various banks in Singapore. Do note that credit card promotions and terms and conditions are subject to change over time.
Credit Card | Cashback Rate | Notes | Best for |
Citi Cash Back Card | Up to 8 per cent | - Minimum spend of S$800 per month. - Cashback at 0.25 per cent if less than S$800 is spent per month. - Capped at S$80 cashback per statement month combined across all retail spend. | Groceries, petrol and dining expenses |
POSB Everyday Card | Up to 10 per cent | - No minimum spend on groceries and utility bills. - Minimum spend of S$800 per month to qualify for cashback on dining, online shopping and telco bills. - Monthly cashback cap of S$3 to S$30 per month depending on spend category. | Dining, online shopping and petrol |
DBS Yuu Card | Up to 18 per cent | - Cardholders earn rewards in the form of Yuu points, which can be redeemed for cashback. - No minimum spend or cap for base 5 per cent cashback. - Minimum spend of S$600 to unlock additional 13 per cent cashback at participating Yuu merchants, capped at 15,600 points per month. | Groceries, telco and transport |
Standard Chartered Simply Cash Credit Card | 1.5 per cent | - Cashback applies to all types of expenditure. - No minimum spend required. - No cap on cashback earned. | All expenses |
OCBC Infinity Cashback Card | Up to 1.8 per cent | - Additional cashback of 0.2 per cent on the first S$3,000 qualifying spend for new sign ups. - No minimum spend required. - No cap on cashback earned. | All expenses |
OCBC Frank | Up to 10 per cent | - Earn 8 per cent cashback on foreign currency transactions and local online or contactless mobile transactions. - Earn additional 2 per cent cashback at selected green merchants. - Minimum spend of S$800 per month. - Monthly cashback cap of S$25 per month. | Foreign currency spending or local online spending |
Maybank Platinum Visa Card | Up to 3.33 per cent | - A three-tier minimum spend of S$300, S$1,00 or S$2,000 is required every month to earn a quarterly cashback. - Quarterly cashback is divided into three payouts. - Maximum quarterly cashback is capped at S$200 | All expenses |
UOB One Credit Card | Up to 15 per cent | Dining, groceries, transport, utilities and online shopping |
How to redeem credit card cashback?
Depending on the credit card issuer, cardholders may have several options for cashback redemption. This can range from an automated statement credit, which reduces the outstanding balance on the credit card, to getting a direct deposit to the cardholder's bank account. Some card issuers may also give the option of converting cashback into miles or other rewards, such as gift vouchers.
What are the pros and cons of cashback credit cards?
Cashback credit cards offer numerous benefits but can also come with some drawbacks, depending on a cardholder's financial habits and goals. Here are some of the pros and cons worth considering:
Pros:
Cashback credit cards are a good way to save money on everyday expenses such as groceries, dining or fuel. Identifying spending habits and financial goals would enable consumers to choose a cashback credit card that aligns with their lifestyle and further increase their savings, as different cards come with more savings on specific spending categories.
When choosing credit cards, cardholders should choose those with perks that best meet their lifestyles and needs.Jacquelyn Tan, UOB's Head of Group Personal Financial Services
Furthermore, a cashback credit card is a straightforward form of reward as the underlying principle is simply to receive cash rebates on expenses, making it easy to understand. Unlike other forms of rewards such as miles or points which tend to have limits on how much can be redeemed at any given time, cashback credit card users are sure to enjoy the rewards as long as they have used the card to pay for expenses.
There are also no expiration dates on cashback rewards, unlike credit card that rewards users in miles or points which tend to expire after a certain period.
Certain cashback credit cards can also help users earn higher interest rates when coupled with their corresponding current or savings account. Using the UOB One Credit Card as an example, cardholders who also have a UOB One Account get to enjoy the bank's interest rate of up to 7.8 per cent per annum if they charge more than S$500 to their UOB One Credit Card, and either credit their salary of minimum S$1,600 or make three GIRO debit transactions per month.
"By effectively 'double-dipping' on the credit card cashback mechanic as well as savings account interest rates, cardholders save more just by swiping their cards," said Jacquelyn Tan, UOB's Head of Group Personal Financial Services.
Cons:
One downside of a cashback credit card is that it has limited reward redemption options. Compared to a credit card that earns reward points, which can be used to redeem rewards such as merchandise, travel, or discount deals, cashback credit cards are all about giving rebates on expenses. While there are cashback cards that enable conversion of cashback into other forms of rewards, most do not have that option.
Typically, most cashback credit cards come with minimum spend requirements in order to qualify for and maximise the cashback benefit. If a cardholder's spending habits do not meet these requirements, the result is very little cashback earned or even none at all.
Another drawback is the monthly cashback caps that are imposed on many cashback cards. This limits the amount of cashback that can be received, and once the limit is reached, cardholders will not be able to earn any more cashback until the next billing cycle or statement period. It is essential for cardholders to be aware of this cap, especially those who are high spenders.
"When choosing credit cards, cardholders should choose those with perks that best meet their lifestyles and needs," said UOB's Tan.
"For those who prefer a versatile, no-frills card that gives them cash rebates per purchase, cashback cards are ideal," she added.
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