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Is Unlimited Cashback Overrated? Consider This Credit Card Instead

Peter Lin

Cashback credit cards are the preferred type of credit card for Singaporeans. This shouldn’t be a surprise – everyone loves earning money by… spending money. In fact, 71% of people surveyed by MoneySmart in our latest credit card survey said they preferred cashback rebates. This is especially true for unlimited cashback credit cards.

However, when it comes to unlimited cashback credit cards in Singapore most of them have:

  • A low cashback rate, and
  • A high annual fee

Let’s look at each of these 2 considerations:

 

1. Unlimited Cashback Credit Cards with a low cashback rate

We’re not saying a “low” cashback rate is a bad thing. After all, when you have no limit to how much you can earn in cashback rebates, there’s no doubt that a rate of 1.5% is generous.

Think about it this way – let’s look at how much you can earn in a month if you charge $5,000 on these cards in Singapore:

Credit Card Cashback Rate Total Cashback Earned
American Express True Cashback Card 1.5% on all spend, 3% for the first 6 months on the first $5,000 $5,000 * 3% = $150 in cashback
Standard Chartered Unlimited Cashback Card 1.5% on all spend, 3% for foreign currency spend $5,000 * 1.5% = $75 in cashback

There’s no denying that’s pretty substantial. But honestly, not all of us can spend $5,000 consistently each month. And don’t forget that after the first 6 months, the American Express True Cashback Card earns you just as much as the Standard Chartered Unlimited Cashback Card.

So let’s look at someone who spends $3,000 consistently, the result is something like this:

Credit Card Cashback Rate Total Cashback Earned
American Express True Cashback Card 1.5% on all spend, 3% for the first 6 months on the first $5,000 $3,000 * 3% = $90 in cashback
Standard Chartered Unlimited Cashback Card 1.5% on all spend, 3% for foreign currency spend $3,000 * 1.5% = $45 in cashback

Still very respectable, but honestly, less impressive compared to our earlier scenario.

On the other hand, a card like the HSBC Advance Card, despite needing a minimum spend requirement of $2,000 a month, allows you to earn the maximum cashback rate of 3.5% on all of your spending.

Credit Card Cashback Rate Total Cashback Earned
HSBC Advance Card 3.5% on all spend $3,000 * 3.5% = $105 in cashback

What’s the catch? Spend less than $2,000 a month, and your spending earns cashback at a rate of 1.5%. Spend more than $2,000 a month, and your spending earns cashback at a rate of 2.5%. Either way, your cashback is capped at $70 a month. That means you shouldn’t be spending more than $2,800 a month on this card.

But here’s where it gets better. If you’re a HSBC Advance banking customer? Your spending earns an additional 1% cashback. What’s more, your cashback is now capped at $125 a month. This means that you can now spend up to $3,571 each month before hitting that cashback cap.

So no, the HSBC Advance Credit Card is not an unlimited credit card. But for those of you who don’t spend more than $3,500 a month consistently, it will feel like one!

 

2. Unlimited Cashback Credit Cards with a high annual fee

Credit Card Annual Fee Total Cashback Earned
American Express True Cashback Card $171.20 1 year fee waiver
Standard Chartered Unlimited Cashback Card $192.60 2 years fee waiver

No one likes to pay credit card annual fees. Fortunately for most banks, there’s ways to get the annual fee waived. But even if you can’t, be glad that both of these cards waive the first year’s annual fee.

I mean, you can always cancel the card if your waiver request is denied.

The HSBC Advance Credit Card has an annual fee of $192.60 as well. However, as a HSBC Advance customer, your credit card annual fee is perpetually waived!

 

How easy is it to become a HSBC Advance banking customer?

Just credit a monthly salary of at least $3,500 to a HSBC account, and hold a HSBC credit card. That’s it.

And considering how being a HSBC Advance customer significantly boosts the quality of the HSBC Advance card, it’s really a no-brainer. What’s more, as a HSBC Advance customer you get access to a whole suite of advantages, like preferential rates and rewards with HSBC and individual financial reviews with HSBC Advance Managers.

 

That said, it’s clear the HSBC Advance Credit Card is not for everyone

We’re not saying that you should just cancel all your cashback credit cards and move to HSBC. Ultimately, you should choose your cashback credit cards based on your lifestyle. If you barely spend $1,000 a month, for example, and most of your spend is on dining on the weekends, the HSBC Advance Credit Card is probably not the best card for you.

But what we are saying is that unlimited cashback credit cards aren’t for everyone, especially if you find yourself consistently spending about $3,000 each month. The HSBC Advance Credit Card allows you to earn up to 3.5% cashback rebates on all spend, with a high monthly cap of $125 if you’re a HSBC Advance banking customer.

HSBC Advance Credit Card

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Card Benefits

  • Option 1: American Tourister Caravan 70cm TSA luggage (worth S$260) + Up to S$40 Cashback
  • Option 2: Get $120 Cash Back + Up to S$40 Cashback
  • 1.5% Cash Back on all purchases with no minimum spend / 2.5% Cash Back on all purchases with $2,000 minimum spend per month. Capped at $70 per month
  • For HSBC Advance banking customers: 2.5% Cash Back on all purchases with no minimum spend / 3.5% Cash Back on all spend with S$2,000 minimum spend per month. Capped at S$125 per month
  • 1st year principal card annual fee waiver for non-HSBC Advance banking customers / Perpetual principal card annual fee waiver for HSBC Advance banking customers
  • Perpetual supplementary card annual fee waiver

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What are your thoughts on unlimited cashback credit cards? We want to hear from you.

The post Is Unlimited Cashback Overrated? Consider This Credit Card Instead appeared first on the MoneySmart blog.

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