Rewards for Using Credit Cards

Recently I had a friend asked me about credit cards and what are the rewards that one can earn from using it since she was deciding which credit card to get. And seeing that i have not addressed this topic before, why not write a blog post about it. By the way this will be a short post and not too in-depth. If you want more detailed explanation, feel free to comment or message me so that i know what credit card to suggest since having the right credit card makes a huge difference on the reward you get. Without further ado, let's dive into the topic of the rewards that you can get with credit cards.

For credit card rewards, there are three types which are cashback, points and miles.

Cashback Rewards
The most commonly available rewards from credit card is cashback whereby for spending with your credit card, you get a percentage of it back as cash rebate. So for instance, if you purchase a item that cost $100 and the credit card gives you 5% cashback, you will receive a credit of $5 in your bill statement that can be used to offset your next month credit card bills. However, most of it has a catch that you will need to take note of as the devil are in the details. 

Based on what I have researched and read, most cashback cards will require you to fulfill certain criteria that gives different cashback. And the cashback awarded to you is also usually capped at a certain amount. Using my DBS Livefresh credit card for example, in order to get 5% cashback capped at $70, I have to 

• Use it to shop online
• Pay using Visa payWave
• Spend minimum $700 in a calendar month

Other cashback credit card also has similar mechanics such as you can only earn cashback when you use it for dining or retail. Hence it is important to take note of how much you spend and on which category to decide the suitable credit card to get.

Miles Rewards
Miles reward credit card are ideal for people who will most likely be travelling overseas once a year since the miles are essentially used to redeem flights or hotel stay. For me, I have the American Express® Singapore Airlines KrisFlyer Credit Card that gives me miles for using the credit card with no cap on the amount of miles that i can earn in a month. With sufficient miles, I can use it to redeem for air-tickets either from Singapore Airlines (SIA) or Scoot or Tigerair. As the miles reward is restricted to mostly air tickets or hotel stay, it means that you will need to travel overseas to enjoy your rewards. But on the other hand, no cap on miles earned means it will be easier to earn the miles needed to fly to your dream destination. 

Points Rewards
I personally find points rewards the most versatile as it is a superset of the miles and cashback rewards. You can choose to convert the points into cash rebate, air-tickets, hotel stay, products, movie tickets and many more depending on the rewards offered by the credit card company. For myself, with the points that i have earned via DBS points, I have successfully managed to redeem it for 2 $30 Din Tai Fung vouchers, 2 $10 NTUC vouchers and 1 pair of Shaw Movie tickets that can be used on any day. That is worth close to $100 in terms of monetary value. And the best part is that there is also no cap on the number of points you can earn similar to miles.

    
To recap, there are three types of rewards. If you spend alot like more than $5,000 a month on many categories and have no preference on rewards, get a points reward credit card. If you are into travel for rewards, then get a miles reward credit card. If you spend around $800 a month on a few categories, then get a cashback reward credit card as your returns are maximized compared to other rewards type. 

Hope this short post has managed to help you understand better about credit cards and its reward. 
Let me know which reward do you prefer and also what topic should i go into next. Feel free to comment below and don't forget to subscribe via email or like my Facebook Page Just Being Ernest!