Should you own a cashback credit card, and are you missing out by not having one?
A cashback credit card is one of the most popular cards in Singapore. The idea of getting money to use as you will, instead of being shoehorned into specific discounts or stores, is incredibly attractive to Singaporeans of all ages. But is it right for you?
These are the types of Singaporeans who benefit the most from owning one:
1. Small or Side Business Owners
If you run a small or side business, consider using a cashback card as your “company credit card”. You will usually run up significant business expenses--this will come from things like buying printer cartridges and paying for web hosting.
The easiest way to save money on these is to put it all on one cashback card, which you pay back in full at the end of each month. Assuming your business overheads are S$4,000 a month, putting them all on a 6% cashback card would give you S$240 back every month that you can offset in your next credit card bill.
2. Online Shoppers
Most credit cards have rewards points or discounts that require you to visit a specific merchant. Unfortunately, for business reasons, many of these merchants are local Brick & Mortar (B&M) stores. As an online shopper, you may find many rewards programmes inapplicable to you.
3. Singaporeans on a Tight Budget
If you truly want to save money on a credit card, you need to do two things: pay it back in full, and don’t use the rewards that tempt you into more shopping. If a 20% discount on appliances means you’ll end up with a new blender you didn’t actually need, that’s no longer savings.
A cashback credit card removes the temptation--you get to offset the rebates in your next bill. That’s it. The end. No using vouchers or trading in rewards that end up with you walking into another mall.
4. Singaporeans Who Prefer to Have Only One Credit Card
It is a commons strategy to limit yourself to a single credit card. This caps the size of the debt you can incur, and it will be much easier to track the billing cycle (no missed payments, no late fees).
However, it is difficult to optimise the use of your credit card if you just have one. Few cards are versatile enough to give you well-rounded benefits on any kind of spend... except for cashback cards. Most cashback cards (don’t all) are very indiscriminate about what you buy with them, and as we said in point 2, the “reward” is cash rebates that you can pay off your next credit card bill.
If you can’t be bothered fiddling to find the right card for the occasion, just use a single cashback card for everything.
5. Singaporeans Who Like Tracking Their Monthly Spend
The cashback amount is a lazy person’s spending gauge. It’s obvious that the more you spend, the more cashback you will earn. If you usually get just S$20 in cashback, but this month you got S$80, you know your spending has been out of control.
Now we’re not suggesting you skip keeping records, or ignore precise budgeting. But in lieu of the two, this is one way to get a heads-up. And it’s more enjoyable since you can literally spend the indicator!
Get the Right Type of Cashback Card
Not all cashback cards are equal. Some cards like the Citi Cash Back Card have higher cashback limits than others, and some can be just as constrained as regular cards (e.g. you only get cashback for spending in specific places). Keep checking SingSaver.com.sg to find the best cashback credit card for you.
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