Credit cards provide rewards in the form of air miles or cashback when you use your card for purchases. The decision to opt for a cashback or a miles credit card solely depends on your travel, lifestyle, and requirements. Choosing the right card can help you earn better rewards. This article will discuss the advantages and disadvantages of both these reward types so you can choose the right one that suits your needs.
How do your earned air miles work?
You get reward points or miles for every Singapore dollar that is spent on your credit card. The number of miles you receive per dollar varies from one card issuer to the other. These accumulated miles are converted using the frequent flyer program and it can then be redeemed for a free flight ticket on select airlines.
How does cashback rewarded on spendings work?
Cashback is a flexible reward programme offered on cards. Cashback cards offer a fixed amount in return mostly in the form of statement credits for all your purchases. If you are not travelling frequently, you may consider applying for a cashback card. This is because cashback once accumulated can be redeemed instantly.
Advantages and disadvantages of air miles
- Air miles have a higher value than cashback.
- Miles are often uncapped.
- Miles offered on certain cards do not have any expiry period.
- Some of the air miles cards even offer complimentary travel insurance and airport lounge access for the trips you undertake.
- The value of air miles changes over a period of time. They may not always be beneficial as factors such as your monetary condition, travel interests, and the airline’s rewards programme may have changed over a period of time. In such scenarios, the accumulated air miles cannot always be redeemed.
- Air miles can only be used under travel category.
- The accumulated miles can expire within 5 years on certain cards.
- If you are an occasional flyer or someone who seldom uses your card, it may at least take a few years for you to gain enough air miles to enjoy a free flight.
Advantage and disadvantages of cashback
- The money earned on your cashback cards can be used to pay for your travel, groceries, dining, and merchandise.
- Unlike miles, you don’t need to wait for the cashback to accumulate. This means that cashback can be redeemed instantly.
- Certain cards offer higher cashback rates when you use your card at specific retailers or establishments or under select categories such as dining, shopping, etc. This can help increase your savings.
- Many cards provide cashback as a sign-up bonus and even provide a waiver of the annual fee. Certain cards with annual fees will provide higher cash rebate earnings on your purchases.
- Cashback is often associated with minimum card spends. This means that you will be eligible for the maximum cashback reward only when you spend a minimum amount on a monthly basis.
- The higher cashback returns you get on your card can be capped per month.
- Most cashback cards will include higher interest rates. These rates are mostly annual percentage rates (APR).
Redemption of air miles vs redemption of cashback
Air miles redemption
Once you have accumulated enough miles or reward points on your card, you can redeem them. Banks will usually charge a conversion fee of S$25 to convert your existing points into miles under the available frequent flyer programs.
Credit card companies are associated with a number of frequent flyer programs. This gives you the option to convert your miles and travel to different countries. Some of the frequent flyer programs include KrisFlyer Miles, Asia Miles, Royal Orchid Plus, Garuda Frequent Flyer, Etihad Guest, SkyMiles, Executive Club, Infinity MileageLands and AirAsia BIG.
Some of the miles on cards have a validity period of 2,3, and 5 years depending on the card. However, cards like Citi Premier Miles Credit Card do not have any expiry period. The accumulated miles can be transferred to the desired airline and hotel partners.
Cashback can be redeemed in the form of statement credits. This can be utilised to offset your future purchases.
Best Cashback Rewards Earning cards in Singapore
Best Miles Earning Cards in Singapore