For those who prefer to begin their search by reading more in-depth analysis, we've also created a list of travel credit cards that we think represent the best combination of rewards rates and perks for Singaporeans.
- DBS Altitude: Fee-waiver & perks like lounge access
- Citi PMV: 45,000 Welcome Citi Miles with S$9,000 spend in 3 mo
- KrisFlyer UOB: 3mi/S$1 on dining, transport, shopping & travel
- UOB PRVI Miles: Fee-Waiver + 20k bonus miles, 2.4 miles per $1 overseas
- Amex SIA KrisFlyer: Directly earn KrisFlyer miles, S$150 SIA credit
- OCBC 90°N: Unlimited cashback + miles & annual renewal bonus
How to Pick the Best Travel Credit Card for You
In looking for a travel credit card, you've probably seen a lot of promotional phrases like "5% cash back," "3 miles on all dining and restaurant bills," and so on. Miles, cash back, and points are everywhere when it comes to credit card offers. It may be difficult sifting through hundreds of offers without a deep understanding of what these things do and what they are ultimately worth. In this guide, we will help you to get a firm grasp of these concepts and effectively compare them to decide which type of card is best for you.
Cashback, Points and Miles: What's the Difference?
Rewards credit cards provide either cashback, points or miles when you use the card to make a payment. The biggest difference among these benefits is the flexibility they provide to consumers.
Points can be redeemed for different prizes and services at designated locations, and exact worth of points depends on the card issuer. While points generally function similar to coupons and discounts (effectively similar to cashback), many award programs allow easy conversion of points into miles.
Miles can be redeemed for flight tickets at various airlines designated by the card issuer, and generally are worth somewhere between S$0.01 to S$0.08 depending on how you redeem them: the longer and more expensive the flight, the higher the value of a mile. Most mile programs allow easy transfer to a number of airlines and hotel chains. Most people will likely redeem miles at conversion rate of around S$0.01 per mile.
Cash back rewards are the most flexible and straightforward to understand. These cards simply rebates a certain percentage of expenditures back to the consumer, often in the form of statement credits.
Who Should Prefer Miles Over Cashback?: Whether your credit card collects you frequent flyer miles or cashback, you have to keep in mind that they are worth nothing unless you redeem them. While these cards accumulate awards automatically, they benefit you without your effort. This is especially important to remember in case they expire. Before you decide on a miles card, make sure you actually have occasions to use the miles (or points). In that regard, the first thing you should consider when deciding between Award Miles and Cashback much you value free air tickets. If you travel often, earning miles may have a more positive impact on your finances than earning cashback.
Also, you should also bear in mind how the value of a mile varies depending on the price of the flight tickets: short-haul economy flights tend to be worth less than 1 cent per mile, medium-haul economy awards are worth around 1 cent per mile, and business class seats are worth more than 3 cents per mile. If you have a reasonable number of opportunities to redeem miles at or above 1 cent per mile, mile awards cards tend to be quite valuable.
How to Compare Rewards Rates of Miles and Cashback Cards: In order to accurately compare different credit cards types, you must determine their rewards rates. This rate, often presented as a percentage, represents a card’s efficiency – how much value does it give you back given the amount of money you spend? For instance, if one card gives me 8% of my bill in rebate, while another gives me just 5%, I would always prefer the former. Cashback cards have clear and explicit rewards rate, but miles cards or point cards do not. We have to calculate the rewards rate in those cases.
The most important step in calculating a credit card’s rewards rate is figuring out the worth of its miles or points. First, you must figure out how many points (or points) are needed to redeem for a certain prize. Dividing the dollar value of that prize by the number of points needed yields the value of dollars per point (or mile). Multiplying this figure by the number of points (or miles) you get per S$100 spent results in the rewards rate. Miles are somewhat easier than points, because most mile programs are convertible to one another 1 mile for 1 mile. We have done our own analysis which indicates that most miles are valued around 1 cent or higher. On the other hand, value of points will differ depending on the issuing bank's policies.
Lastly, each card will offer different rewards rate for different areas of expenditure. For example, some cards will reward 4 miles per S$1 on dining, but will only yield 1 mile on other expenses. Once you understand how your typical monthly expenses are distributed across different categories, you can apply the aforementioned principle to calculate how much award you can earn from any given card.
Doing this analysis for each card can help you effectively evaluate which card will result in the highest benefits for your budget.
What About Perks Like Lounge Access and Travel Insurance?
Besides earning airline miles, many credit cards can also provide great travel perks. Some of those include free access to airport lounges, complimentary travel insurance, and even free limousine transfers to the airport. Sadly, some people are not even aware of these perks and forget to utilise them fully.
These travel perks are very valuable not only in terms of monetary value, but also in terms of the amount of physical and psychological comfort they can bring to your trips that can often be quite exhausting. You can read our analyses for the best air miles credit cards that provide free airport transfers, airport lounge priority pass lounge access and complimentary travel insurance.
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