Credit cards offer a great way to earn from nearly all kinds of spending, from shopping sprees to buying groceries and even booking your next vacation. While the benefits are undeniable, it's important to understand your card to avoid making unfortunate mistakes. Read the 5 sections below to learn more about credit card conditions and scenarios that are commonly overlooked or misunderstood.
Last Minute Transactions May Not Count Towards Minimum Spend
Most (but not all) cashback credit cards come with a minimum spend requirement, or amount that cardholders must spend each month to access high advertised rates. While rebates of up to 10%+ are incredibly attractive, they're not automatic. Failing to spend the necessary amount (which can range from S$400 to as much as S$2,000) usually means consumers earn just a base rate of just 0.3% on all spend. This alone sends a clear message–advertised rates won't matter if you can't consistently meet a card's minimum spend requirement.
Even if you can confidently meet minimum spend requirements, there's still a chance you'll miss out on higher rates. This comes down to the timing of your purchases. Transactions are posted to an account several days after they actually take place due to processing and authorisation processes. Purchases made at the very end of a month, therefore, may not be posted until the next month–and will not count towards the current month's minimum spend requirement. As a result, last-minute purchases aren't likely to help a cardholder reach their requirement, and those who fall short (even by a few dollars) could end up losing out on a substantial amount of cashback.
Falling S$1 Short Can Lose S$67/Month in a Quarter System
Just like the timing of purchases can be crucial, so too is consistency–especially in a quarterly rebate system. In such structures, cardholders must hit a minimum spend requirement every month, for 3 months total. For UOB One Card, consumers can earn an incredible S$100/month, or S$300/quarter, if they maintain S$2k spend for each of the 3 months. However, if a cardholder spends just S$1,999 for one of those months, they'll fall into a lower tier and earn just S$33/month (S$100/quarter).
While the rewards for consistency are quite high, underspending by just S$1 once can lead to a hefty loss (S$67/month, or S$200/quarter). That being said, UOB One Card is an excellent fit for those with stable budgets, and actually offers higher cashback potential than nearly all of its competitors. If you opt for a card with a quarterly rebate system, take care to manage your spend closely in order to reap maximum rewards.
Supplementary Cardholders May Not Have Access to Cashback They Earn
There are many benefits to having a supplementary credit card. To begin with, they offer a great way for young adults (especially university students) to begin engaging with their personal finances under the guidance of their parents, who can monitor their monthly statements. Additionally, supplementary credit cards often are "free" or have deeply discounted annual fees.
Nonetheless, supplementary cardholders should be aware–while they can generally earn the same rewards rates, banks typically issue these rewards back to the primary cardholder's account only. In other words, if you're spending a great deal on your supplementary card, you're actually helping the primary cardholder boost their rewards. This may be fine if you're sharing the card account with a spouse or child, but it's worth discussing beforehand to keep everyone in-the-know.
Guests May Count Towards Your Limited Lounge Visits
In many cases, the best part of having a miles card is the associated travel perks. While the priciest cards tend to have the most benefits, there is an increasing number of options on the market that are both affordable and offer free airport lounge access. The market forerunners, DBS Altitude Visa and Citi PremierMiles Visa, both offer 2 free visits per year. However, these visits may not stretch as far as you'd think. In both cases, bringing a guest is technically free, but counts as one of the allotted visits. If you travel with a companion, your perk will be exhausted just from one leg of your trip. Afterwards, you'll need to pay USS$27+ per person for access.
Credit Card Rewards & Terms Can Change–A Lot
Recently, there's been quite a bit of upheaval across the credit card landscape. When you apply for a card, you may feel fairly certain that its terms and conditions–as well as its rewards structure–will stay the same. However, this is not the case. Changes vary both in form and scope. For example, new transaction types may be excluded from earning rewards. Within the last few months, many credit cards have moved to exclude insurance payments, for example.
A more dramatic way in which cards change is through an overhaul of their rewards systems. A credit card's advertised rewards rates, eligible categories (ie, dining, shopping, etc.), minimum spend requirement & more may shift. In some cases, updates can completely change what type of consumer is most likely to benefit from the card. For example, CIMB Platinum MasterCard recently removed rewards for beauty spend, while adding cashback for dining. Changes can also dramatically improve the value of a card. Maybank Family & Friends MasterCard recently removed most of its merchant restrictions, expanded rewards to dining, and decreased its minimum spend requirement.
Ultimately, credit card terms aren't set in stone. Keep tabs on your card to stay apprised of any changes, and don't be afraid to reevaluate your card's value if its terms and structure shift.