For many people, the convenience of not needing to carry a thick wallet filled with cash is often a good enough of a reason to have a credit card. Others just get whatever credit card their friends recommend, without really considering how such a card fits into their own unique set of needs.
However, believe it or not, choosing the wrong credit card can easily cost you hundreds of dollars a year. A card that works well for your friend may not always work out well for you.
Compare The Best Credit Cards in SingaporeFind Out More
Mismatch of Rewards and Spending Habits
Let’s say your friends all use the Citi Cashback Credit Card, and recommended you do as well as it’s the best deal you could possibly get. Thinking your current set of credit cards is suboptimal, you get the Citi Cashback Card. What you may not have realised when doing this, however, is that, while the Citi Cashback Card is easily considered one of the best cash back cards in Singapore, it is actually not that great unless you spend mostly on food, and not on other things like travel, entertainment or shopping. In other words, the “best” credit card for you really depends on how you spend your money.
Citi Cash Back Card
Great cash back card for average spenders looking to benefit from everyday purchases.
Pros
- Great dining and groceries rewards
- High petrol discounts
Cons
- Lacks shopping and entertainment rewards
- Not suitable for lower budgets
The Citi Cashback card provides 6% cashback on all of your dining and grocery expenditures. However, for almost everything outside of these two spending areas, it only provides 0.2% of cash back. Therefore, if you are spending about S$600 per month on food, but S$1,400 on other things, it will only earn about S$38.80 of cash rebate for you (do note that you can earn a lot more if you have a car and purchase petrol).
If you have a more diverse spending habit outside of dining and groceries, a card like OCBC 365 with a more diverse set of rewards could be more beneficial. For example, OCBC 365 card’s cashback program spans petrol, dining, groceries, online shopping and even streaming services. It’s also worth pointing out that OCBC 365 card waives its annual fee for anyone who spends S$10,000 on the card every year, a feature the other card lacks.
OCBC 365 Credit Card
OCBC 365 Card offers one of the best cashback rates for essentials on the market.
Pros
- 5% rebate on dining, 3% on groceries, transport, utilities, pharmacies, streaming services and EV charging
- Fee waiver with S$10,000 annual spend
- Up to 21.04% fuel savings at Esso and 22.92% at Caltex
Cons
- 0.3% rebate on general spend
- High S$800 minimum spend requirement
| Expenditure Category | Citi Cashback Card | OCBC 365 |
|---|---|---|
| Petrol | 8% | 6% |
| Private Hire Transport | 8% | 3% |
| Dining | 6% | 5% |
| Groceries | 6% | 3% |
| Public Transport | 0.2% | 3% |
| Utilities | 0.2% | 3% |
| EV Charging | 0.2% | 3% |
| Streaming services | 0.2% | 3% |
| Watsons | 0.2% | 3% |
| *Offerings are accurate as of June 2024 | ||
Mismatch of Spending Amount
How much you tend to spend every month also influences which card you should be using. For instance, the UOB One Card, easily considered one of the best cashback cards in the country, requires a minimum spend of S$2,000 monthly to qualify for its S$200 of quarterly cashback (up to 10%). If you spend less than that even for 1 out of 3 consecutive months, you only receive S$50 or S$100 of cashback.
UOB One Credit Card
Maximum cashback for stable budgets.
Pros
- Good fit for budgets of at least S$2,000 per month
- Easy cashback on daily spend
- Gives rebates for paying bills
Cons
- Doesn't fit inconsistent budgets
- Annual fee
Given that UOB One Card charges an annual fee of S$196.20 (waived for one year), you could do much better with a card like the UOB Absolute Cashback card, which provides 1.7% of cash rebate no matter how much you spend.
UOB Absolute Cashback Card
UOB Absolute Cashback gives you 1.7% limitless cashback on all categories, no limits, no minimums and no caps.
Pros
- Unlimited cashback
- No min, caps or exclusions
- American Express Card privileges
Cons
- Low cashback rate for smaller budgets
- Annual fee
Rewards Credit Card Gone Bad
Another scenario in which an otherwise great credit card could cost you money in the long run is when your spending power is not sufficient for the card’s reward system.
The UOB One Card, for one, doesn’t even give you anything if you spend less than S$500 on the card per month. Even worse, if you spend out of your budget for too long just to earn rewards, it could lead to your financial ruin.
The UOB PRVI miles card, on the other hand, though highly rewarding, requires you to incur S$1,000 of overseas spend per month in your first 2 months of getting the card and pay the annual fee to get the 50,000 bonus miles.
UOB PRVI Miles Visa Card
UOB PRVI Miles Visa Card is a great fit for high spenders and frequent travelers looking to rapidly accrue miles, with no min spend both at home, abroad and on travel bookings.
Pros
- Great for rapid miles accrual
- Awards high spend on airlines & hotels
- Complimentary travel insurance
Cons
- Doesn't fit infrequent travellers with mostly local budgets
- Lacks luxury perks & privileges
Given that credit card debt carries an average interest rate of 26% in Singapore, spending more than you can repay can lead to a substantial amount of credit card debt that will cost you dearly.
Therefore, you always have to be very familiar with the minimum spending requirements of the credit card that you are using, and manage it to a level that you can easily repay in full at the end of every monthly billing cycle. A rewards credit card is only good for you so long as your budget can handle it; both of these cards can be phenomenally rewarding so long as you don’t spend outside of your means.
Parting Thoughts
Contrary to what many people believe, there is no single “best” credit card. In fact, even the few that are considered the best are not ideal for anyone.
When you are choosing your next credit card, be sure that it fits very well with your monthly budget and spending pattern. You should always be spending within your means. Otherwise, you run the risk of racking up a credit card debt that will cost you a significant amount regardless of how much cash back or miles you are earning on the card.
If you would like to compare different credit cards available to find the best one for your spending needs, check out our results page below!
Compare The Best Credit Cards in SingaporeFind Out More
Read More:
- How to Apply for a Credit Card
- 4 Ways to Save Money When Comparison Shopping Online
- Why You Should Not Hoard Your Credit Card Rewards
- How to Reduce Your Singapore Credit Card Fees to Effectively Zero
- Are Premium Credit Cards Always Better Than Regular Ones?
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