To help you asses and find the best card for you, we have compiled a list of things you need to consider. Every person has individual needs and preferences, and hence different credit cards may cater to those distinct requirements. Use this framework to determine which card might suit your financial needs the best.
How you spend your money
While shopping for a rewards credit card, most people want to know "What is the best rewards card?” The answer to that question is quite complicated and depends on many factors. The features of the best rewards card for you depend on your credit habits, personal expenditure and travel habits. The best way to search the most suitable card for you is to take a moment to carefully consider your preferences.
Do you always keep a balance on your credit card? Rewards credit cards charge you extremely high interest rates up to 25% in exchange for the rewards and bonuses. If you can’t pay your monthly credit card bill, you will be charged additional interests which will likely surpass your earnings in rewards. Therefore, rewards cards are only helpful for users who can repay their credit card bills on time. If you are unable to pay your credit card bills regularly, it is better for you to get a credit card with low interest or continue using cash. For example, Maybank Horizon Visa Card only charges 15% of APR compared to 25% charged by Citi PremierMiles Card. Paying a 10% lower interest rate is much better for you than earning a few reward points.
How Do you Use Your Credit Card Rewards? You can’t receive rewards rewards unless you actually use rewards cards. A lot of people compile miles and points but never use them. Many of those miles and rewards have a certain expiry date. Unless you use them within the time frame, those miles and points are worthless. Based on the expiry dates of the rewards you need to consider whether you want to redeem them frequently or save up for a big redemption.
You should take inventory of the rewards you want to use. If you travel frequently, you might want free air tickets. If you don’t travel often, you may want to get cashback discounts on your regular purchases.
Finally, you have to consider how flexible you can be. Cashback rewards are very straight forward because they can often be redeemed immediately. However, redeeming miles for free trips can be more inconvenient than you would like because it can take weeks to go through the miles redemption process.
How much do you spend? Cards with a high rewards rate often require a minimum expenditure. They can also come with high annual fees. Alternatively, there are many no fee credit card options, but the decision should depend on your expenditure level. As a rule of thumb, you should plan to spend a minimum of S$500 monthly for an annual fee-based card to be viable.
Understanding the Difference between the Cards
While evaluating different credit cards, we have compiled a list of different factors that should sway your decision. A good understanding of these factors can help you figure out if a credit card is really good for you.
How Rewards Work: Most credit cards have a common set of terms—miles, points and cashback—but how these rewards work vary from card to card. Some cards allow conversion between miles and reward points. While most people prefer cashback and statement credits, miles can be useful to those who frequently travel to get an upgrade to business class. Some cards even have the option to transfer rewards points to other loyalty programs.
Rate of the Rewards: The rewards rate is particularly important if your rewards card is your primary credit card. Some cards can award you up to 5% of cashback on what you spend every day. Generally, the more flexible the rewards are- the lower the reward rate will be. Furthermore, you could always use a few different reward cards to maximize rewards rate on your expenditure.
Welcome and Renewal Bonuses are Important: Bonus promotions for new and renewing cardholders offer great value proposition to consumers. Most of these promotional offers come with a condition of a minimum expenditure within a set time limit. The value of these welcome and renewal bonuses can be significant, ranging fromS$50 - S$500, so you should make sure to meet the conditions to qualify for them.