From a strong global recovery following the COVID-19 pandemic to the ongoing conflict between Russia and Ukraine, it is no surprise that Singapore is experiencing inflation. Core inflation in Singapore is projected to average 3 percent in 2022, a nine-year high.
While inflation may be beyond your control, find out how cashback credit cards can help you reduce the damage caused by inflation.
The Mechanics of a Cashback Credit Card Explained
As its name suggests, a cashback credit card is a credit card that refunds you a percentage of your spending. For instance, if your card offers a cashback rate of 5 percent, spending S$100 will earn you a $5 credit on your card. While this may not seem like a lot, your cashback earnings can quickly accumulate, especially if you are a big spender.
Depending on the bank, cardholders may receive the cashback credit either through a direct deposit into the linked bank account or a statement credit reducing the next month’s bill. The great thing about earning cashback credit is that it can be used to pay down your credit card statement balance, offset your next bill, or be used to redeem a gift card.
Having said that, there are requirements to meet in order to redeem your cashback rewards. For some cards, there is a minimum spend requirement and for banks, they require your bank account to be in good standing.
Types of Cashback Credit Cards
Some cashback credit cards will credit your account with cashback for certain purchases such as dining or travel, while others offer cashback across all your spendings. Thus, you should choose a card based on your spending pattern.
Put simply, there are a total of three different types of cashback credit cards. The three include Flat Rate Cashback Credit Cards, Rotating Bonus Category Cashback Credit Cards, and Tiered Rate Cashback Credit Cards.
Flat Rate Cashback Credit Cards
Such cards offer the same cashback across all expenditures. An example of a flat rate cashback credit card would be the Standard Chartered Unlimited Cashback Card which offers unlimited cashback 1.5% cashback on all spend.
Rotating Bonus Category Cashback Credit Cards
These cards provide different cashback rates for different categories of purchases. For instance, grocery purchases may earn you 1% cashback whereas your petrol spending will earn you 5% cashback.
To put things into perspective, we will look at the OCBC 365 Card.
| Spending Category | Rebate |
|---|---|
| Dining (Local, Overseas, and Online Food Delivery) |
6% |
| Groceries (Local, Overseas, and Online) |
3% |
| Transport | 3% |
| Utilities (Telecommunications and Electricity Bills) |
3% |
| Travel | 3% |
| Petrol | 5% |
| All Other Categories | 3% |
As seen from above, the OCBC 365 Card is a great option for the average spender as it offers competitive rates across all categories.
Tiered Rate Cashback Credit Cards
Tiered rate cashback cards offer different levels of cashback depending on the annual spending. To better understand how such cards work, we can take a look at the UOB One Card.
To earn a 5% rebate on general spending, a minimum spend of S$2,000 with a minimum of five transactions per month is required. To earn 3.33%, a minimum spend of S$500 is required.
How Cashback Credit Cards Help Curb Rising Inflation
Image source: Pexels
During times of inflation, your transport, grocery, and every other bill will inevitably increase. If you are already feeling the pinch from inflation, perhaps it is time to consider getting a cashback credit card to reduce your financial damage.
With cashback credit cards, as the amount you spend increases, the cashback earned increases in tandem. As such, you will be able to maximise your savings. While it definitely will not lower your overall expenditure to what it previously was pre-inflation, the cashback earned is still a substantial amount that can help you offset some of those higher bills.
The good thing about cashback credit cards is that you will be able to get rewarded for spending you were already planning to make. Thus, to increase your cashback earnings, you can consider owning a rotating bonus category credit card.
Using a rotating bonus category credit card when you are purchasing items that fall into one of the categories covered will earn you bonus cashback, reducing the effects of inflation.
Making the Most of Your Cashback Credit Card in Times of Inflation
Having understood the benefits of a cashback credit card, here are pointers to keep in mind when looking for the best cashback credit card that suits your lifestyle in Singapore!
Understand Your Spending Patterns
The key to capitalising on cashback credit cards is to understand your spending patterns. Analysing the categories on which you spend the most will help you find a cashback credit card that aligns with your needs and lifestyle.
For instance, if you do not own a car, there is really no reason why you should own a cashback credit card which only offers bonus cashback for petrol. In a similar vein, if you are a low-spender, you should avoid cashback credit cards that have a high minimum spend requirement.
To help you find the best cashback credit cards that fit your lifestyle, we have recommended cards to help you earn the best cashback for petrol, dining, online shopping, low spenders, affluent spenders, and everyday household spend.
OCBC 365 Card: No-Fee Cashback on Petrol
- Annual fee: S$192.60 (automatic annual fee waiver with min annual spend of S$10,000)
- 6% rebate on local, overseas dining & online food delivery
- 3% rebate on local, overseas and online groceries
- 3% rebate on land transport, utilities (telco and electricity bills) & online travel
- 5% rebate on petrol (up to 22.1% fuel savings at Caltex and 20.2% with Esso)
- 0.3% cashback on all other spend
- Visa Concierge Services
Analyst’s Review:
UOB One Credit Card: High Flat Rebate for Dining
Fees, Rewards and Perks:
- Annual fee: S$192.6, 1-year waiver
- 5% rebate on general spend, up to S$300/quarter (S$2,000 min spend)
- Up to 10% on Grab & select UOB travel, 6% on utilities bills
- 3.33% rebate, up to S$100/quarter (S$1,000 min spend)
- 3.33% rebate, up to S$50/quarter (S$500 min spend)
- UOB SMART$ Rebate Programm
Analyst’s Review:
If you regularly spend at least S2,000/month, you could potentially earn S$1,200+/year with UOB One Card. Cardholders earn based on a tiered rebate system, based on their minimum spend within a quarter.
Those with consistent S$2,000/month spend earn 5% general cashback–including for dining locally & overseas–up to S$300/quarter. This rate is boosted to 10% for Grab transactions & select UOB Travel spend and 6% for recurring utilities bills. Lower spenders earn 3.33% cashback up to S$50 or S$100/quarter (depending on spend level).
UOB One Card’s high flat rebate is great for earning on dining, but the card also comes with a few extra food-related perks. Cardholders earn up to an extra 10% rebate through the UOB SMART$ Programme.
Every transaction with select vendors like BreadTalk, Cold Storage & more earns 1 SMART$ (equal to S$1), which can be used to offset future purchases. Even better, this spend also counts towards the monthly minimum. Another perk is access to “Epicurean Delights” via Dining Advisor, which offers discounts & freebies with restaurants, foodpanda, deliveroo and more.
Ultimately, if you want top rebates on all of your spend–including when you dine out–UOB Card is the best option for you
UOB EVOL Card: Rebates on Contactless and Online Spend
Maybank Platinum Visa: Top Rebates for Small Budgets
Fees, Rewards and Perks:
HSBC Advance Card: Best for Affluent Advance Customers
Maybank Family & Friends MasterCard: Best for Everyday Household Spend
Up to S$125/mo with just S$800/mo spend
Foreigners are eligible for this promotion: Apply for a new Maybank Credit Card an charge a min. of S$350 for each of the first two consequtive months upon approval
Subsequent approved applicants will receive S$100 Cash Credit. Terms and Conditions apply
Fees, Rewards and Perks:
- Annual fee: S$180.0, 3-year waiver then w/ S$12k annual spend
- Up to 8% rebate on fast food & food delivery, groceries, transport, petrol & online TV streaming in Singapore & Malaysia, after S$800 min spend (5% rebate with S$500 min spend)
- 0.3% rebate all other spend
Analyst’s Review:
Maybank Family & Friends Card offers a great way for average consumers–and even lower spenders–to maximise spend in Singapore & Malaysia. Cardholders earn 5% rebate on fast food & food delivery, groceries, transport, petrol and data communications/online TV streaming (& more) after just S$500 spend.
Those who spend S$800 earn 8% cashback. Rebates aren’t restricted by vendors for the most part, but are limited to spend in Singapore & Malaysia. Overseas purchases earn just 0.3% cashback.
Maybank Family & Friends Cardholders also have access to special lifestyle and dining privileges. These include discounts of up to 20% at all kinds of establishments, from bakeries to hotel restaurants and beyond. In addition, Maybank F&F Card’s S$180.0 fee is waived 3 years, then with just S$12,000 annual spend.
Because of the low minimums and fee-waiver, this is a great card for lower spenders; the high rewards rates on fast food and restaurant discounts make it an excellent option for frequent diners.
To find out the exact value that you can get out of a cashback credit card, use our Rewards Calculator to find out!
Take Note of the Terms and Conditions of the Card
Apart from understanding your spending habits and patterns, it is also imperative to check the terms and conditions of your card. These include the annual fee, interest rates, minimum spend requirements, and cashback limit.
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Cost of Owning a Cashback Credit Card: Annual Fee and Interest Rate
Defined as the yearly amount charged by banks for the use of their credit cards, most cashback credit cards often carry a high annual fee. However, many banks now offer fee waivers for the first few years of holding a card. For subsequent years, some banks offer fee waivers for customers whose annual spend exceeds an amount specified by the bank which typically starts from S$10,000.
The annual fee and interest rates contribute to the cost of owning a cashback credit card. Such costs are crucial when deciding whether getting a cashback credit card will be worth it in times of inflation. Should the cost exceed the cashback you will be receiving, owning a cashback credit card may not be as worth it for you in curbing inflation.
As such, it is important to plan ahead and crunch the numbers before you decide to own a cashback credit card.
For those looking for a low-maintenance card with fee waivers that are relatively easier to get, you can consider the HSBC Visa Platinum.
It Is Time for You to Decide
In times when the prices of nearly everything are rising, owning a cashback credit card may reduce your financial stress. However, while it may sound enticing, do remember to take note of your lifestyle and the terms and conditions of the cards before settling on one.
Still looking for more cashback credit cards before choosing the best card for yourself? Check out our expert review on cashback credit cards in Singapore to maximise your savings!
This article was first published on Value Champion and was republished on theAsianparent with permission.
This article was first published on Value Champion and was republished on theAsianparent with permission.