Maximising your credit card benefits

We keep saying this at Enjoy Compare: Singapore residents are blessed with some of the best credit card offers in the world.

And here’s why: The island’s unique position in the world’s financial markets has put Singapore in the central position for economic trading and has granted us relative stability and prosperity compared to the rest of the world. We’re an affluent city-state with far higher than average incomes and an incredible spending power.

With a pool of customers at the high end of the income scale, this means that banks in Singapore have to chase down every single customer (and their money) and offer them very special enticements for their business.

That means that Singapore residents get incredible offers from their banks just to get them in through the front door. Whether it’s your current or checking account, loans or a credit card, our financial institutions are desperate for your business, which makes it a customer’s market and when it’s a customer’s market, the seller will do just about anything to retain your custom. That means stellar credit card offers which give by far and away some of the best deals on the planet.

However – that comes with one simple caveat. Play by the rules or your lack of financial sense may just come back and bite your hand.

Can I get rich off my credit cards?

Good question, to which the answer is (largely) no.

We have a few simple rules when it comes to credit card ownership, and they bear repeating once more:

• Always pay off your balance in full every month
• Spend within your means
• Never use your card to hold or build up debt
• Use your card’s benefits package to beat the annual fee

These are all important rules that will save you money, and could lead to you ending your financial year a little – but not much – in profit.

The temptation with the word “profit” is to try to beat the banks at their own game and use your credit cards as a means of making money. And that’s where we urge caution. While you CAN make money off your credit card, it’s not the be all and end all of credit card ownership.

The temptation is to overspend on your card simply to keep collecting those precious loyalty points without taking into account how you’re going to pay off your bill at the end of the month. An unpaid balance means interest charges, and it doesn’t take long for the extra money you’re paying to your bank outweighs the benefits of the rebates and membership points you’re earning. That’s our first two rules – pay off your full balance, spend within your means.

By all means, try to make money by using your credit cards, but stay within our simple lifestyle rules and you won’t be stung. Just remember that the banks’ main incentive is their own profit, so they’ll be trying to make money off you.

Yes, they take a small commission from the retailer every time you use a card and this pays their overheads for operating the credit card in the first place. But they know the big money comes in customer interest charges – while they’ are not deliberately trying to scare you into debt (because that becomes a risk to them if the debt goes bad), they know that they make the most money from interest charges.

Hint: Think of the interest charge as an “Idiot Tax”, and that’s all the motivation you’ll ever need to pay off your card every month.

How do I make the most of membership benefits?

So, let’s look a little closer about how you can get your card to work for you.

First, the downside. Most premium credit cards in Singapore come with a modest annual fee. This can range from something as low as a few dollars, right up to S$300. Our advice to you is this: Do not let the annual fee put you off applying for a good credit card. The likelihood is that – if used sensibly – you should be able to “beat the fee” and earn benefits that easily exceed your annual payment.

But this can only be achieved with a little bit of work on your own behalf. The key to beating the fee is to do your research. The best way to do this is to scan through the varied credit card deals that feature on the Enjoy Compare website and choose a short list of cards that reflect your lifestyle the closest.

Singapore banks know that people live different lives, and will have a portfolio of credit card offers to appeal to different people. That means business travellers can apply for a package that emphasises airline loyalty points, hotel discounts and travel insurance. Drivers can look out for credit cards that offer impressive discounts at petrol stations; while shoppers find cards that offer discounts, rebates and store loyalty points.

Such is the desire of the banks to get you as a premium credit card customer, they tailor their cards to give you the best deal possible. And that’s the upside. The banks desperately want you as a customer and will fight as hard as they can for your signature on that credit card application form.

Let’s take a look at the sort of deals you can expect.

The very best credit cards available to Singapore customers are those issued to executive travellers, and the perks are – let’s be honest here – amazing.

Currently (September 2014), we humbly think the best of the field comes from American Express, whose Kris Flyer Ascend card offers superb benefits for the S$256 annual fee. In fact, they waive the fee for the first year, so applicants are already winning, and the additional benefits mean that the frequent business traveller should easily beat the system.

For example, AmEx offers a welcome bonus of 5,000 Kris Flyer miles, 1 Kris Flyer point for every S$1.20 spent, bonus points if you spend more than S$1,000 per month, free airport lounge access, free travel insurance, and complimentary stays in Millennium hotels and resorts.

Of course, this card is aimed directly at the frequent traveller, and directly benefits those who fly with Singapore Air, which means it’s not much use to anybody who is a stay-at-home type.

These are superb offers, but even the most affluent traveller needs to beware that trap of overspending. The extra points for spending over S$1,000 every month look inviting but don’t make this a personal target if you don’t have the means to bring your balance back down to zero come month-end. Those points count for nothing if you’re paying more than they’re worth in interest charges.

Making the most of cards for all lifestyles

Singapore banks know that premier cardholders aren’t just about international travel. That’s why they’ve also tailored superb deals for others.

Rewards-based credit cards are worth investigating and could offer you massive benefits if you apply for the right account. And this is where you’ve got to sit down, fire up EnjoyCompare.com and do a bit of your own research.

Get a pad and write down what kind of person you are, and where do most of your money gets spent. Drill this down to which specific brand names get the most of your custom, and go through our credit cards list to find the ones that most appeal to the life you lead.

For example, You own a car which you drive an awful lot around the island and beyond. Your nearest and most convenient petrol station is a Shell brand – which means that (September 2014) the Citibank Cash Back Credit Card jumps out of the page at you. The Citibank cash back comes with an annual fee of S$192.60. However, this offers 18% discount at Esso and Shell, which – at the current pump price – works out at 40 cents per litre.

It doesn’t take much maths to work out that even if you only fill up your car once a month, you’re already beating the annual fee. If you do a lot of driving, that means a modest profit on your motoring through credit card discounts – as long as you remember to pay off your full balance at the end of every month.

On top of the petrol discounts, you’ll also receive a 5% saving on every dollar you spend on your everyday shopping. That means that if you use your Citibank credit card instead of your regular bank debit card for your everyday expenses (with the usual pay-of-your-balance warning), this is one account that can save you impressive sums month after month.

Oh yes – it comes with a first-year fee waiver, so even if you don’t drive, the 5% shopping discount will be working for you even if you only hold the card for a year.

But what if you don’t bank with Citibank? That doesn’t matter in the slightest. The credit card companies don’t care who you bank with, just as long as your credit report is good enough for them and you satisfy income requirements. You could have a bank account on the moon for all they care.

Most people in Singapore still have the bank account they opened when they left education or went into NS, and that’s impressive brand loyalty. But that should not be a bar to shopping around for the best credit card deals.

Your number one motivation should be the best card for your lifestyle, not staying loyal to a single banking brand.

I’m a student – what’s in it for me?

Banks are always on the lookout for new customers, knowing that once you’ve signed up, they’ve probably got you for life. It’s the same with credit cards – the huge majority of Singaporeans still have the first credit card they applied for and haven’t given a single thought to looking for a better deal.

That means that Singapore banks will fight tooth-and-nail for new account holders, and offer deals on both bank accounts and credit cards to pull you in.

Some people might look sceptically at credit cards for students, but we say that as long as young people are aware of the implications of debt, they’ll use a credit card sensibly.

A credit card should never be a storage house for your debt because it only takes a few wrong decisions to find yourself having to pay back more than you can budget and this leads to a world of problems that can take years to sort. That’s why we support student credit cards that come with more modest credit limits and offers that encourage sensible spending through those difficult college years.

We know that Singaporean students are more frugal than those in the rest of the world – the average UK and US student leaves college with tens of thousands of dollars’ worth of debt (I should know – I’m paying number one daughter through the UK university system, and the tales of astonishing student debt and wild spending she tells me are eye-watering) while here the emphasis is on financial security alongside academic achievement.

Benefits are more modest on student credit cards, and the offers depend on what you’re looking for in life.

If you’re a student who is more interested in the cheaper social life, then the Citibank Student Clear Card with its S$29.96 annual fee could be for you. It’s all about party privileges and free entry into the Zouk club, and a free camera. If that’s your bag, then go for it.

However, if you’re more interested in cheaper living, then the Standard Chartered NUS Alumni Platinum Credit Card, which comes with an S$180 fee, offers discounts on everyday shopping, loyalty points – and here’s what Standard Charter are really selling – a complimentary Super Salary Current Account. The bank is clearly trying to nab you as a long-term customer, and despite the seemingly steep annual fee, this looks like the card you should consider if you’re a student in Singapore.

Other benefits of credit cards

It pays to do your research when choosing a credit card. The emergence of “smart cards” means that credit cards now have multiple uses that mean they are now more useful in your everyday affairs.

Take – for example – the OCBC Frank Cashback Credit Card. Not only does it offer 6% rebates when you spend S$500 every month, but it also doubles up as a transport card and comes registered with the NETS FlashPay Auto Top-Up feature, which means it’s a card that could be used every day. With a staggeringly low S$32.10 fee, it’s available to anybody earning over the S$30,000 threshold salary.

That’s just one card that offers unexpected benefits for a modest fee. However, most credit cards come with benefits that you don’t know exist unless you unpick the small print. That’s why you should do your research diligently before applying, as often there are great benefits that aren’t widely advertised.

For example, Most credit cards offer you an extended warranty for your purchases. If something goes wrong with an item outside of the manufacturer’s or retailer’s warranty limit (and that’s happened to us all at some stage or other), check your credit card terms and conditions as you may find that you’ve got the extra cover on your purchase.

Armed with this knowledge, you can confidentially say “NO” to the sales assistant when offered an extended warranty on a product, knowing full well your credit card has you covered. And in some cases, that means a lot of dollars saved.

Other things you might not know about:

• Free concierge staff – even on the most modest of credit cards. People don’t know and don’t ask, but this is a valuable service just waiting to be used.
• Free travel insurance – Even if you haven’t got a dedicated travel credit card, you might find that you have travel insurance cover already. However, check the terms and conditions – it might be only you who has the coverage, and not your partner or family. My recent holiday to Europe was fully covered by his-and-hers travel insurance (including inconvenience cover) provided for free on our regular credit cards. A big saving for both of us.
• Price protection and retail purchase protection – Most people don’t realise the level of coverage they get from a credit card. You might like to use cash or a bank card when making a purchase, but what you might not know is that credit cards offer you incredible protection against all kinds of mishaps that you wouldn’t otherwise get. Some cards will protect you for up to 90 days against fire, theft, or accidental damage. You may also be protected by your credit card company for orders which are not fulfilled because a company ceases trading. Retail purchase protection offers you a refund if you find the same item cheaper elsewhere. In both cases, read your terms and conditions.

In all cases, it’s about knowing your cards in terms of service and making the most of them. Savvy cardholders can save a lot of money just by knowing the power of that piece of plastic in their wallet or purse.

How often should I change credit cards?

We’ve spoken before about brand loyalty and how 90% of Singaporeans will stick with the same bank and credit card for their entire life. Loyalty is a fine thing in a dog, but less so when it comes to financial affairs.

Staying with the same credit card – which you probably applied for when you were in college or NS, means that you are almost certainly on the same poor terms and conditions with poor membership perks. Your financial position has undoubtedly improved along with your spending power, and you deserve something far more powerful in your wallet.

That’s why Enjoy Compare encourages you to consider changing your credit card on an annual basis. The key word is “consider” – take a look through the credit card offers listed on your website and see which ones offer you the best deals for your lifestyle and spending power. You might find that your credit card or cards adequately serve your purposes and no further action is necessary.

The best time for this is when your annual fee is up for renewal. You might even want to give your credit card’s helpline a call at this stage, tell them that you are considering a change to another bank and “Would you mind awfully waiving my annual fee?” You will be amazed by the number of times this brinkmanship works, but if it doesn’t there’s a world of credit cards out there willing to treat you as their number one customer.

It’s at this point we should mention what is variously termed “carpet-bagging” or “rate-chasing”. We’re often asked if it’s worth switching your credit card on a regular basis to take advantage of introductory offers, before moving on after a year. That’s a difficult one to call, and depends on your motivation. Yes, it is perfectly acceptable if your credit rating is sufficiently high, to shop around for a new credit card every year, especially if you keep your balance at zero at the end of every month, and you are always on the search of a better deal.

What we don’t support is using a 0% interest deal to continually shift accumulated debt from credit card to credit card. We don’t believe in using credit cards for the storage of personal debt, zero per cent or otherwise, as this not only hits your credit rating but also encourages people to spend outside their means.

There’s the additional risk of running out of 0% havens for your debt and ending up paying punitive interest rates once the fees kick in. If you have a debt, take out a loan or arrange a facility with your bank. Credit cards are not the place for debt or reckless spending and never will be.

Used properly, a credit card is a perfect tool – one that makes your everyday life easier, and one that leaves you (slightly) better off, month after month.

Take a look at the cards we have on offer, and enjoy comparing!