The convenience of credit cards attracts everyone. It doesn’t matter if you have cash or not. If you want to buy a new pair of denim, all you have to do is swipe your credit card and get a bill. You can pay for it later. Although, being too late can result in piling up interests on the purchase you made on credit. It is really important to pay the bills on time before the interests add up. This improves your credit score and the credit card companies have a special affection for people with a good credit score. They show their affection by providing their customers with rewards and bonuses.
A good credit score improves the chances of getting sign-up bonuses on your next credit card. Credit card companies also provide added benefits for their customers when they make transactions for a certain amount of times or spend a certain amount every time. These rewards and bonuses come to you in the shape of cashback and free travelling miles. Many credit card companies partner up with local merchants and airline companies. Credit card companies provide a benefit of cashback when you shop at a partner merchant. This gives business to both the credit card and the merchant. Airline companies are sometimes in need of cash when their business is running low. They sell free travelling miles to banks for cash. This brings in the free miles for credit card users.
Cashback or Miles: Which one is better?
Choosing between credit cards with reward systems requires a self-analysis of your lifestyle and the spending patterns that come with it. The way you use your credit card for your monthly expenditure decides how better your benefits will be. Most of you might be planning your expenses and looking forward to getting exciting rewards from your bank or Credit Card Company. Getting free traveling miles would also decrease the costs of your travel if you want to go out for a vacation in the new-year. A lot of credit card users feel that the best way to get rewards is in the form of cashback. It is seen as a more practical approach for benefitting from your credit card. People who don’t travel much for business or some other work, like to have a cashback credit card, so that there is no hassle of turning miles into cash. There are questions you should find answers to before you decide what kind of rewards you would like on your card.
1. How often do you travel and what are your future travel plans if any?
Many people have jobs that require them to travel regularly. Sometimes domestic, and sometimes overseas. If you travel a lot of domestic flights yearly you should consider earning flight reward points on your credit card which will save you a lot of cash which can be used to buy a ticket when the rewards get used up. In case you travel overseas even twice or thrice in a year, extra flight miles can make you an elite member of the flier club. If you like to have a long vacation every year at faraway places then the flier mile rewards will give you one more reason to be there. You’d be lucky in this case if you have the American Express Singapore Airlines KrisFlyer Ascend Credit card. It gives you the benefit of earning 1.2 miles for every dollar you spend locally and 2 miles per dollar if you spend overseas. It also gives you the chance to earn miles on your cab rides at 3.2 miles on every dollar you pay to your Grab cab driver. So you earn free travel miles while you’re travelling.
2. How much do you spend on your card?
The amount of expenditure that you do on your credit card affects your credit score. If you have a high annual fee, your chances of getting potentially better rewards increases. The only thing that you need to do to get those rewards is spending enough monthly to build up your credit score. So, if you spend S$50000 per month on a card that counts 1.2 miles on every dollar you spend, you can get a free international flight. In such cases, you can rest assured that it will be of more worth than a cash back card even if you pay S$65 as yearly fees. But if you’re someone who spends small amounts consecutively throughout the month, getting a 1.2 percent cashback is a good deal. If you’re making purchases on groceries, petrol, dining, and Grab cab rides using your credit card, then you can have cashbacks that can be a part of your savings in the long run. The Citi cashback card, for example, gives you 8% of cashback on things like groceries and dining. If you’re an online shopper, you can get up to 18% of cashback on the UOB YOLO credit card.
3. What’s important to you: cash flow or travel?
We all have our set of priorities. For some people, it could be cash that is important for their savings, and for some, it is saving on the traveling expenses. If you are a working person, a tradesman or an event manager, and in the prime of your life, you are sure spending a large part of your money for travelling. Some people are required to travel a lot because their job needs them to. The thing that is worse than the stress of travelling is the expenditures you incur on the long flights. So, free travel miles must be your priority for now. With a lot of free miles piling up with the number of flights you’ve taken, you can even get a free vacation whenever you have collected enough miles to get a free Europe return trip.
If you’re someone with a family and are saving for an occasion or for the education of your kids, you surely have cash flow in your priority. Spending on the credit card for the things that you can buy in cash (groceries, petrol, etc.) can get you enough cash back for the month to pay off your annual credit card bill without flinching an eye. Over a long period of time, you can even hold on to the cash in your bank account and earn good interests. In case you do a lot of shopping online you do know that the discounts they provide are never enough for the goods they sell. So, why not get a card that gets you heavy cashback on online payments, and you can have a sense of financial freedom while buying stuff.
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