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Beginner's Guide To: Cashback Credit Cards

Cashback is a marketing concept that has gained wide traction with modern marketers due to the perceived value on money it offers to customers. As the name suggests, it is a portion of the purchase price that is returned to the customer. It could be in the form of money, or rewards points equivalent to cash. Credit cards and debit cards often add a certain percentage of the value of a transaction to the account of a customer as an incentive. Many popular online retail websites offer such rebates too. They may either store the value in a separate online wallet of the customer or add it to a registered bank account. Some experts have said that cashback schemes, introduced in the market at the right time, can also increase the total life-cycle of a product. It is a revenue-sharing model where a manufacturer/marketer shares a small percentage of the revenue with their customers. It also improves customer loyalty and repeated use of a card/site.

While there may not be a definitive answer to this question, Fang Ying, the author of an article titled What Makes Consumers Use Their Loyalty Points? published by SMU refers to researchers who said that loyalty marketing has been around for decades. Frequent flyer miles programmes, cashback and rebates, and rewards points aren’t new. Cards and brick-and-mortar shops have used them for a long time. However, with the rise of internet marketing, such rewards types have gained more significance.The article tries to establish the fact that retaining a customer is easier and more cost-effective than acquiring a new customer. Loyalty programmes that are perceived to offer constant value, play a big role in retaining customers. In a survey involving 7,000 respondents, conducted by Collinson Group, a globally recognised marketing firm, only 9% had said that they were devoted to a brand. The report had concluded that loyalty programmes, along with dependable product quality and effective communication, could help increase this number.

The Deals Singaporeans Prefer

The Nielson Global Retail Loyalty-Sentiment Survey in 2016 had shown that almost 70% or seven out of 10 Singaporeans were part of some loyalty programme or the other. The survey had shown that around 83% of the respondents in the country identified flexibility of earning rewards points as one of the most important factors for choosing a loyalty programme. Almost 80% found the flexibility of choice among rewards points attractive. Most wanted more value for every dollar spent and any card or programme which had too many exclusions or restrictions on how the rewards points could be used or restrictions on the nature of transactions, were summarily dismissed.

A similar trend was seen in another independent study carried out by the Collinson Group. Interestingly, almost 67% of the respondents also chose cashback and cash rebates as more attractive than product discounts, freebies, free shipping, and other forms of customer incentives. Another research report had established that despite most Singaporeans being avid travellers, most still preferred cashback over miles because of the restrictions many cards placed on spend categories and also because they often required higher income to qualify.

Cashback Credit Cards

Seasonal and Permanent Money-Back Offers

Most cards or websites would help you earn cashback on daily spends throughout the year or offer you accelerated money-back on joining or during certain promotional periods. Many cards and e-commerce websites also offer special deals during festivals such as Chinese New Year and Christmas. Standard Chartered will also offer cashback of up to 20% on Uber rides globally, subject to a maximum of S$50 per month, with a minimum monthly spend of S$900. This particular offer is valid until 30 September 2018. With the Citi Cash Back Card, you can get 20% back on FoodPanda until 30 April 2018. These are examples of promotional rebates.

During the Chinese New Year 2018, HSBC credit cards gave cashback of up to 15% on eligible spends, subject to a minimum spend of S$4,088. Standard Chartered had offered money-back on foreign transactions during Christmas 2017. Maybank FC Barcelona Visa Signature Card, one of the newest co-branded credit cards in Singapore, lets you save 1.6% on all your local spends. The Standard Chartered Unlimited Cashback Card gives you 1.5% back on all spends. Both the cards have no upper limit, no minimum spend requirement, and the returns are available throughout the year.

The Citi Cash Back Card lets you earn up to 8% on daily spends on dining, grocery, Grab rides, and petrol – the earnings are capped at S$25 per category and you need to spend at least S$888 per month. This card also gives you S$50 cash credit for referring friends. While there could be some seasonality to cashback offers, most cards and websites offer them on a daily or periodic basis to keep customers loyal.

Difference Between Cashback and Cash Rebate

Both are essentially a form of getting some money back from your usage of the card. Cashback is generally credited directly into the account in the form of cash credits, which can be used to offset your bills (e.g. Citi Cash Back Card). Cash rebates could be direct money-back (e.g. Maybank Family & Friends Card), credits under a loyalty programme (SAFRA DBS Card), or instant redemption options plus cash credit (POSB Everyday Card). However, most banks in Singapore use both the terms interchangeably.

How It Works

Every time you charge a qualifying spend to your card or make a purchase at a site offering rebates, you’ll get a portion of the expense back. So, a cashback of 1.5% on a transaction of S$40 means that S$0.60 will be credited to your card account. Some banks will allow you to earn additional or bonus rebates. However, you need to be aware of restrictions that might be imposed. Unlike rewards points and miles, the monetary value of which may not be immediately perceptible and often involve slightly complicated calculations, cashback is easy to understand because money is directly credited to your account.

Restrictions on This Bonus

Many cards place restrictions on the amount of money you can save. Some cards may impose limits on how much you can earn per month or have a minimum spend criterion in place. Plus, you may not be earning money back on all types of transactions. Paying your card bill or transferring funds, for example, may not be considered as an eligible spend. For example, cashback on the HSBC Advance Card is capped at S$70 for retail customers and S$125 for Advance Banking customers. The Maybank Family & Friends Card has a minimum monthly requirement of S$1,000 per month.

Products That Offer Cashback

  • Grocery
  • Dining
  • Petrol
  • Cab services
  • Fashion accessories and garments
  • Entertainment activities
  • Health, wellness, and beauty products
  • Home décor and lifestyle products
  • Fast food
  • Food delivery websites
  • Hotel and flight booking
  • Consumer durables, especially electronics

Where to Get the Deals

You can earn cashback in the following ways:

  • Credit card
  • Debit card (e.g. Passion POSB Debit Card which offers 1% cashback at Takashimaya Department Store and S$10 for signing up)
  • Websites like Getex, and ShopBack
  • Direct offers from e-commerce and delivery apps
  • On purchasing gift cards from sites like Fuzzie, redeemable at both online and offline points of purchase
  • Cash benefits on endowment plans in Singapore

Top 10 Cashback Sites for Shopping

Finding the right money-back deals on your favourite websites can sometimes become daunting. By visiting the best cashback sites, you can stay apprised with the latest deals and offers available. If you’re a paid member of such a site, you’ll have access to codes that you can redeem at partner websites for instant discount. You may be able to use the cash credits on your next transaction. Some of the top cashback sites in Singapore are as follows:

  1. ShopBack: This site lets you earn money back by shopping at hundreds of online stores in Singapore. It lets you transfer the earned money to your bank account from your ShopBack account. You can earn up to 30% back by using its promo codes.
  2. Fave: Whether you’re looking for a relaxing spa session or a gruelling workout at a gym, you can get value for money by using the promo codes offered by Fave while purchasing a service or a product.
  3. Ebates: You can get up to 40% money-back at over 2,000 stores when you shop through Ebates. The cashback earned in a quarter will be transferred to your PayPal account or a cheque of an equivalent amount would be sent to you.
  4. Getex: Get up to 15% assured money-back when you shop at any of the 80 online partner stores of Getex. This site also aggregates the best deals from the internet for you so that you don’t have to go looking for them.
  5. TopCashback: Enjoy appealing deals when you book hotels or cruise trips through sites like Expedia or Agoda using TopCashBack coupon codes.
  6. MyCashBack: Earn instant money-back of up to 80% on buying computer games for your kids or antimalware for your computer, among other things. Deals have been categorised under different verticals to offer you complete convenience.
  7. CupoNation: From shoes to grocery, you can enjoy amazing deals when you shop through CupoNation and use its promo codes.
  8. Picodi: You can enjoy exclusive deals when you book a cab ride, book a hotel, or do online shopping through Picodi.
  9. MilkaDeal: This site has partnered leading retailers in Singapore and abroad. You can use MilkaDeal codes to get attractive cashback on your transactions.
  10. Shop.Com: Fashion accessories, travel, or electronics, you can save a ton by using this site. Partnered with some top sites, it gives you access to codes redeemable for money-back.

How to Make the Most of Cashback Deals

To maximise your returns, you should have a clear idea of the terms and conditions of the offers. You need to know the restrictions. Find out if there is a cap on how much money you can earn back in a certain period, a minimum spend requirement, and/or restrictions on transactions that would be considered eligible for cashback. You may even use multiple cashback cards to increase your rewards. As soon as you have hit the ceiling for the month, you can start accumulating more savings with another card. Choose a card or offer from a cashback site that matches your spending habit rather than just going for cards/deals that offer the highest money-back. If you want maximum savings on petrol, you can go for the OCBC 365 Card that helps you save up to 23% at Caltex stations. You also earn cashback of 5% on charging petrol transactions to your card. However, if you want to earn more on grocery, dining, cab rides, and petrol, you can opt for the Citi Cash Back Card. You’ll also earn up to S$120 when you apply for the card and spend. You can earn up to S$50 for referrals.

What You Need to Pay

Most sites won’t charge you a separate fee for cashback redemption. It’s because they’re simply passing a small percentage of the commission they earn from partner sites for customer conversion, onto you. Most cards in Singapore may also not charge a separate fee for redemptions.

Value of Cashback Offers

The answer to this question lies in your primary usage pattern and the kind of card you own. If you know that you’re going to make a purchase anyway, it’s nice to get something in return for the money you spend. However, charging more transactions to your card to get more value is a debatable point. This is because most cards have a minimum spend criteria and an earning limit. If the spending requirements are high and the rebates earned are not high enough, then you are not really saving anything significantly.

Now, if the spending requirements are low-to-reasonable, and the cashback cap is sufficiently high, then the card makes perfect sense. For example, by charging a minimum of S$600 a month or S$7,200 a year to the card, you could earn up to S$80 a month or S$960 a year. So savings over a longer period may be significant. However, you should always look at the bigger picture. Most of these cards offer a range of other complimentary benefits. Check the annual fee on the card and if there is a waver during the initial period. Moreover, if you continue to pay your monthly outstanding balance in full, you can save on interest payments. That would mean you’re getting a higher return on every dollar you spend. Even if you’re paying an annual fee, you can use your earnings from cashback to offset the fee, if you’re earning enough cash credits.

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