Tis the season (or nearly so) for Christmas presents, fancy parties and busted budgets. Singaporeans are known to spend more than a thousand dollars on Christmas gifts alone. Given this heightened level of spending, most of this expenditure will go on credit cards.
One savvy step to reducing the impact of your holiday spending is to wisely utilise credit cards to earn points and miles. The smartest tip, of course, is to not overspend beyond what you can readily pay off in full every month. As long as you adhere to this rule, this is a lot to be gained by nitpicking the best cards to pay for your holiday shopping.
Cards with bonus categories on shopping
There are many credit cards that have bonus rewards on shopping. These shopping credit cards provide accelerated earnings for specific types of purchases, usually x% cashback or x miles per S$1 on purchases at stores and online retailers. During the fourth quarter, these cards capitalize on holiday spending by giving bonus rewards for purchases made at department stores, big box stores and Amazon—popular stores for the holidays.
Pro tip: When applying for one of these cards, you should first consider how often you shop. Many of cashback cards have a minimum monthly spend requirement, so infrequent shoppers may prefer more general purpose flat-rate cards with decent overall rewards rate. Also, miles credit cards like Citi Rewards Card could be better for high spenders, since they don't put a cap on how much rewards one can earn in a given month.
Cards with sign-on incentives
Cards with introductory bonuses are also great way to maximise return on your extra holiday spending. Some of the biggest welcome bonuses are worth between S$200 and S$400, but they require rather hefty upfront spending. For instance, many cards require a minimum spend of few thousand dollars for the first three months to qualify for the bonus points and miles. While that’s a lot of money, the extra S$1,000 to S$2,000 an average shopper is expected to spend this holiday season could make it much easier to meet these requirements. For those who can’t stomach such level of expenditure (after all, nobody should ever spend more than they can pay back immediately), there are also budget-friendly offers offers a more budget-friendly bonus minimum, such as spending $500 in the first month to get S$100 cash back.
Pro tip: No matter the size of the sign-on bonus, you have to make sure you can pay it all off when your bill comes in. Or, any interest you accrue on a remaining balance will erode the value of the sign-on bonus.
0% APR cards
If your holiday spending typically spins out of control and you find an insurmountable balance in January, using a credit card that offers 0% APR on new spending for a limited time can be a great way to finance your holiday purchases. These cards apply no interest on new purchases between 3 months and 12 months, giving you time to pay off your holiday spending interest-free. There aren't that many cards like these in Singapore, but DBS Black Card is certainly one that stands out.
Pro tip: Make sure to have a feasible monthly payoff plan for your holiday balance, so you have no balance remaining when the 0%-interest period expires.
Store credit cards
Some "traditional" shoppers may want to consider using a department store credit card as a way to get the most from their holiday purchases. These cards are typically issued by banks in partnerships with well-known department store. They are also quite useful since the level of discounts they provide are rather large. If you are particularly loyal to one department store and the card offers a substantial discount on your first purchase, using one of these cards can help greatly reduce the financial pressure of your holiday spending.