Credit Cards

Cashback vs Air Miles vs Rewards – Which credit card is best for you?

Cashback vs air miles vs rewards credit cards in Singapore

Clara Lim


Picking the right type of credit card is more of an art than a science. It’s like choosing your Dungeons & Dragons character or starter Pokemon. In fact, just like Bulbasaur, Charmander and Squirtle, there are 3 major types of credit cards in Singapore – cashback, rewards and air miles credit cards. These are not all the credit card types, but they’re the most popular ones.

So how do you figure out what type of credit card suits you best?

First, you have to understand how each one works, and their respective pros and cons. In the end, only YOU can say which one is most suitable for you.

Cashback credit cards in Singapore

A cashback credit card gives you cash rebates that are linked to your spending. That means a small percentage of your total spend is automatically credited back to you – effectively, a discount off your next credit card bill.

The most basic kind of cashback card has a standard rate (sometimes known as basic cashback or base rate) for calculating the rebate. This number starts from around 0.5% but can be as high as 1.5%.

Of course, even 1.5% – which is actually a very good base rate – sounds rather puny. To entice customers, banks now issue all sorts of cashback cards with meatier bonus cashback rates of up to 8% for spending in specific categories (e.g. dining), with specific companies (e.g. Uber) or in specific circumstances (e.g. on weekends).

Note that many of these enticing rebates also come with all kinds of terms & conditions, most prominently minimum spend requirements and/or cashback caps.

Pick a cashback credit card if:

You’re lazy and you know it

Cashback credit cards are ideal for lazy people. If you pick one that fits your spending habits, you won’t have to tax your brain too much. Since the rebates are automatically calculated and credited, the whole endeavour should look like this:

Step 1 – Use credit card as per normal
Step 2 – ???
Step 3 – PROFIT

Your spending is predictable

Most cashback credit cards have minimum spend requirements and cashback cap restrictions, meaning there’s usually a sweet spot where you max out on rebates.

It also means you don’t have to spend wildly to get the best returns. If you spend quite modestly, it’s going to take you forever to get air miles on an air miles credit card. Cashback credit cards, on the other hand, don’t require that kind of expenditure – as long as they have manageable minimum spend requirements. Within those limits, no matter how little you spend, you’ll get a rebate.

You’re the slow and steady type

We’re not gonna lie – cashback cards aren’t the most exciting on the market. You won’t get a round-the-world trip to show off on Instagram, nor will you be able to go on a shopping spree with CapitaMall vouchers.

If you’d rather have extra money in your pocket than such flashy rewards, then a cashback credit card is right for you.

But watch out for:

T&Cs that make you jump through hoops

Remember how we said cashback cards are good for lazy people? That’s not strictly true for ALL cashback cards. They can get really complicated with many different tiers/categories and terms & conditions.

The onus is on you to make sure the card will reward you for your ACTUAL spending habits. Otherwise you’ll either lose out on the cashback or, worse, end up spending more than planned just to qualify for the bonus tiers.

Think cashback cards are for you? Shop for the best cashback credit cards in Singapore.


Air miles credit cards in Singapore

If you read any travel websites, you have probably come across at least one proponent of “travel hacking” whose story goes something like “I flew around the world in First Class for free and so can you! Pay $9.99 for my e-book to find out how.”

Wait, before you buy that e-book – we’ll tell you how. Most of these lobangs involve air miles credit cards – sometimes known as miles cards or frequent flyer credit cards.

Basically, you are rewarded with air miles for every dollar spent on your card. This conversion rate is known as the earn rate. At the risk of sounding like a physics textbook, earn rate is sometimes measured in miles per dollar or mpd. (You’ll need to know the lingo if you end up running in air miles nerd circles.)

The numbers vary from card to card, but there’s usually a local earn rate (e.g. 1.4 miles per dollar) and a higher one for foreign currency spending (e.g. 2 miles per dollar after conversion to SGD). Bear in mind, though, that overseas spending incurs transaction fees.

If the card is linked to an existing miles/frequent flyer programme like KrisFlyer or AsiaMiles, the miles you earn are typically credited directly into your account. You can proceed to use them on your next flight.

Otherwise, the card may credit your earned miles in some other form of “currency” like Citi Miles or DBS Points. You might be able to earn miles quicker with these points systems, but it’s not that easy to turn them into flights. There may be added conversion costs or restrictions e.g. points can only be redeemed in batches of 1,000 miles.

So… there’s a LOT of number crunching you need to do if you want to find the absolute best air miles credit card. In fact, cards that yield the highest mpd may not even be marketed as an air miles card!

Pick an air miles credit card if:

Cashback cards just don’t do it for you

Many air miles enthusiasts sniff at cashback cards. They don’t get what’s so great about getting a few bucks off your bill every month – how can that possibly compare to a glorious trip to the Maldives? If this is you, it’s a clear sign that you’re cut out for the air miles life.

I’m sure there’s some kind of neuroscience-meets-evolutionary-psychology explanation for this. Maybe the air miles people are descendants of hunters and the cashback people were once gatherers. In any case, sometimes your brain is set up a certain way and you just gotta roll with it.

You earn and spend a lot (or plan to), especially overseas

Air miles credit cards are marketed as premium cards. In most cases, you’ll need a relatively high income (not entry-level) to qualify, plus many cards charge an annual fee (though these usually count towards your miles).

On the flip side, if you charge a lot to your card anyway (say you’re the family breadwinner or a frequent business traveller) or have some big expenditures coming up (like a wedding or new home) then an air miles credit card is the way to go. They typically do not impose a cap on your rewards – unlike cashback cards.

Obviously, you love to travel

Er, air miles credit cards aren’t going to be fun for you unless you’re genuinely excited about travelling in style. I never used any of the benefits (e.g. premium lounge access) on mine because I’m a hobo whose idea of luxury is a hot shower. In fact, I clean forgot about my miles card for an entire year. Don’t be like me!

But watch out for:

Your expenditure going out of hand

Caution: air miles credit cards might be addictive. Once you start earning miles, your desires might inflate accordingly and you might find it difficult to reign in your spending – “just $X00 more and I can fly Business Class!” Plus, there’s usually no cap on the miles you earn.

You’ll need to keep tabs on things

Because there are so many different programmes for earning air miles, it is crucial to check out the fine print on your miles card. Important details like expiry dates, redemption costs, redemption lead time, etc. are significant because you’ll need to bear them in mind constantly to manage your miles. You REALLY do not want to have your hard-earned miles expire on you.

Think air miles cards are for you? Shop for the best air miles credit cards in Singapore.


Rewards credit cards in Singapore

Rewards credit cards is a very broad term – almost every bank gives “rewards” points for every dollar charged to your credit card. The points can be accumulated so you can redeem stuff, usually vouchers, but air miles and gifts are also redeemable.

These cards are set up with rewards points systems with a standard rate, for example $5 = UNI$1 or $1 = 5 STAR$.

Then they throw in sweeteners like “10X rewards on online shopping / overseas spend / Visa payWave / [insert specific consumer behaviour here]”. This multiplier or bonus rewards let you earn a whole lot more points if they fit your spending habits already, though they sometimes come with a minimum spend.

Sometimes it’s not just dollars spent that garner you points. For example, with the DBS Esso Card, $10 = 1 Smiles point, but also 1 litre of fuel pumped at Esso also = 1 Smiles point. We Singaporeans sure love our points.

Many rewards credit cards come with expenditure caps – you’ll only earn rewards up to $1,000, let’s say – so keep that in mind. If you’re planning to incur huge expenses then you might end up “wasting” some of your money.

OK, so let’s say you’re done collecting points and you want to treat yourself. It used to be that you can only redeem shopping or dining vouchers, but there are several cards that let you redeem air miles as well. In fact, we found a couple of rewards cards that are good for earning miles too.

Pick a rewards credit card if:

You think cashback cards bo hua leh

Somewhat like the air miles enthusiast, you find cashback rebates rather… well, measly. Rewards points are generally worth more, especially if you can make use of big 10X or 5X multipliers. When it comes down to it, you’d really rather have $50 shopping vouchers in your hand than $10 extra in your bank account.

You want air miles but don’t travel or spend that much

Come to think of it, even air miles cards might also be bo hua. As demonstrated in the blog post above, certain rewards cards have better earn rates than air miles cards.

If you spend well below $1,000 a month then it’s well worth considering a rewards card. Plus, you have the flexibility of deciding whether to redeem air miles or vouchers eventually.

But watch out for:

You’re basically incentivised to shop

Not all rewards cards set up with shoppers in mind, but many are. You’ll see lots of bonus categories like “online shopping” or “shoes, bags and clothes”. It’s pretty easy to go crazy with these. Even more so if you redeem your points for MORE shopping vouchers.

Credit card rewards catalogues

Don’t think that just because you have the highest earning rewards card, you’re all set. You need to check out the rewards catalogue and see if there’s anything you actually want before you start using the card. If you’re after air miles, that’s fine. But what if the catalogue only has things like Mothercare vouchers (and you’re single as can be)? Get a sneak preview of the rewards catalogues in Singapore here.

Think rewards cards are for you? Shop for the best rewards credit cards in Singapore.


Conclusion: Which should you choose?

There are so many factors that come into play when you’re picking the right credit card. There’s your annual income and spending habits, of course, but there’s also stuff like your personality, what you value, how you prefer to be rewarded, how much time and energy you want to devote to your credit cards.

Only you can decide which type suits you best.

But if you’ve made it to the bottom of this article, you would probably have a better understanding of the 3 major types of credit cards in Singapore – and with luck, one of them might intuitively appeal more to you.

Which starter Pokemon will you pick? Tell us in the comments!


Related articles:

The Best Cashback Credit Cards in Singapore 2018

The Best Air Miles Credit Cards in Singapore 2018

The Best Rewards Credit Cards in Singapore 2018

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Clara Lim

I used to be MoneyDumb. I hung out at H&M every day and thought that a $50 lunch set was a good deal. These days, I spend my time researching the crap out of life and trying to maximise utility on micro-decisions. I'm not sure if that's an improvement.