Everyone loves a good cash rebate. With a cashback credit card, you can get money that you’ve spent back in every purchase you make.
What if we tell you that banks will pay you when you shop? Well, they pay you a percentage of what you’ve spent. This comes in the form of a cashback credit card, perfect for saving money on your daily necessities.
Cashback credit card rebates are usually not specific to a type of purchase – you can easily get money back on petrol, groceries and even health products.
Here is a guide on using a cashback credit card to its fullest.
Best Buys Cashback Credit Cards with Highest Cashback
|Best Cashback Cards||Highest Cashback||Average Cashback||Welcome Gift|
|HSBC Visa Platinum Credit Card||5% rebate on Petrol and Groceries||2.61%||S$200 worth of Resort World Sentosa vouchers|
|ANZ Optimum World MasterCard Credit Card||5% cashback on either Groceries, Dining, Shopping and Travel||2.25%||S$88 cash rebate with a min. retail spend of S$388 within 30 days of card approval|
|American Express True Cashback Card||5% cashback on everything for the first three months||2.08%||5% cashback for the first 3 months (with a cap on spending of S$5,000) + first-year fee waiver|
How does a Cashback Credit Card Work?
Whenever you charge a transaction to your cashback credit card, a percentage of it is credited back into your account. You can use the cash rebates to offset your outstanding monthly balance.
Apart from the cashback percentage, there is also a cashback limit. This is the maximum amount you can receive in cashback. For example, say you use a 6% cashback card with a $500 limit, and you purchase a $10,000 stereo system. Your cashback would be $500, not $600 (6% of $10,000), as $500 is the absolute limit.
Always repay your monthly outstanding balances in full. Assuming you don’t pay interest on any outstanding balance (which would eliminate any savings from cashback), you are effectively getting a universal discount when you buy with the card.
The 4 Rules to Getting the Most out of Your Cashback Credit Card
1. Check out the highest cashback (%) available on each card
The highest cashback offered by each card differs for different banks.
Some cards offer higher cashback as a welcome offer. A prime example is the American Express True Cashback card which provides a 5% cashback on all spend for the first 3 months, and 1.5% cashback for the rest of the months.
Other cards provide different cashback rates depending on what you spend on. For example, the ANZ Optimum World Mastercard gives you 5% cashback on a spending category of your choice – categories include dining, shopping, travel or even groceries – and 1% cashback for all other categories.
On the other hand, there are cards which provide highest cashback for multiple categories. For example, HSBC Visa Platinum Credit Card offers 5% on groceries and petrol.
Alternatively, there are cards which give you the highest cashback base depending on how much you spend. For instance, the Standard Chartered Manhatten World Mastercard provides 3% cashback instead of its usual 1% if you spend more than S$3,000 in a month.
2. Use average cashback (%) as a measure of how much cash rebates you can get on all spend
Not all cards reward you with cash rebates wherever you spend. Some cashback terms are tied to certain merchants or selected categories. If you are someone who wants to earn points on anything you spend on, the average cashback (%) is a figure you would definitely be interested in.
Average cashback is the weighted average cashback received across all categories on the card.The weight on each category is based on our estimate of a regular person’s monthly spending of S$2,500 with the breakdown as follows:
Groceries: 20%, Petrol: 12%, Dining: 24%, Health & Beauty: 4%, Online Shopping: 8%, Shopping: 12%, Utilities: 8%, Entertainment: 12%
Although your actual monthly spending is most likely going to to differ from our estimates, the average cashback will still provide you with a good starting reference for you to make your decision with.
3. Check the minimum spend required for receiving your cash rebates
This is the most important clause in the terms and conditions. Without fulfilling this clause, your cashback card is pretty much useless.
The ANZ Optimum World Mastercard is the simplest cashback card in the market. There are no complicated terms such as minimum spend or maximum cashback tied to the card. It simply provides you with a 5% cashback on your chosen category and a 1% cashback on all other spend regardless of how much you spend each month.
On the contrary, some cards may require you to spend a certain amount before you can receive any cashback. For example, you need to spend at least $500 per month before you are eligible for any cash rebates on the OCBC Frank Credit Card.
4. Find out what is the maximum cashback you can receive
This is the second most important clause in the terms and conditions. You would never want an occasion where you spend thousand of dollars on your card to realise that you can only receive a maximum cashback of $50 for the month.
Cards without cashback cap are great because the more you spend, the more savings you get. To save you the troube of having to read all the fine prints, Singsaver.com.sg has taken the maximum cashback into consideration when calculating the average cashback one card gives.