Miles vs. Cashback: Which Credit card Strategy is Right for Your Singapore Lifestyle?
Getting your first credit card? Don’t fall into the debt trap. Learn how to choose the right card, avoid common mistakes, and use it to build credit — not regrets. Simple tips for first-timers in Singapore!
LOOKING FOR THE BEST CREDIT CARD?
You’ve been using your credit card for a while now. You pay your bills on time. You know the basics.
But every time you tap your card to pay for dinner or your weekly groceries, a little question might pop into your head: “Am I using the right card? Am I getting the most back for my spending?”
It’s a great question to ask. Because every dollar you spend is an opportunity to earn something back. If you’re using a card that doesn’t match your lifestyle, you could be leaving hundreds of dollars’ worth of rewards on the table every year.
In the world of credit card rewards in Singapore, there are two main teams: Team Cashback and Team Miles.
One offers you simple, instant savings. The other offers the exciting dream of a free flight in Business Class.
So, which team should you be on? This guide will help you figure it out.
Team Cashback: The Simple and Straightforward Saver
Let’s start with the most popular and easiest-to-understand strategy: cashback.
How it works:
It’s beautifully simple. For every dollar you spend on your card, the bank gives you a small percentage back in cold, hard cash. This “cash rebate” is usually automatically credited to your next credit card statement, reducing your bill.
For example, if you have a card that gives you 5% cashback on dining and you spend $100 at a restaurant, you’ll get $5 back. It’s like getting a small discount everywhere you go.
The Pros (Why people love it):
- It’s Easy: There are no complicated calculations. 5% is 5%. You see the savings on your bill every month.
- Instant Gratification: You don’t have to wait or save up points. The reward is immediate and tangible.
- It’s Flexible: A dollar saved is a dollar saved. You can use that “saved” money for anything you want.
The Cons (What’s the catch?):
- The Cashback Cap: This is the biggest limitation. Most cashback cards have a monthly cap. For example, a card might offer a high 8% cashback, but it’s “capped at $50 per month.” This means once you’ve earned $50 in rebates, you won’t earn any more for the rest of the month, no matter how much you spend.
- Minimum Spending: Many high-rebate cards also require you to spend a minimum amount each month (e.g., $600 or $800) to “unlock” the high cashback rate. If you don’t hit the minimum, you might only get a very low base rate, like 0.3%.
Who is Team Cashback for?
Cashback is perfect for you if:
- You love simplicity and don’t want to play complicated games.
- Your monthly spending fluctuates and you don’t always hit a high amount.
- You don’t travel very often.
- You just want to save some money on your everyday expenses like groceries, dining, and transport.
Team Miles: The “Play-to-Win” Traveller
Now, let’s talk about the more glamorous and complex world of collecting air miles.
How it works:
Instead of getting cash back, you earn rewards points for every dollar you spend. You then save up these points over time and convert them into frequent flyer miles with an airline’s loyalty programme, like Singapore Airlines’ KrisFlyer or Cathay Pacific’s Asia Miles.
The goal is to collect enough miles to redeem a “free” flight ticket (though you still have to pay the airport taxes).
The Pros (Why people are obsessed with it):
- Incredible Value (Potentially!): This is the biggest draw. While a dollar in cashback is always just a dollar, miles can give you outsized value. For example, you might use 100,000 miles to redeem a Business Class flight ticket to Japan that would have cost you $5,000 in cash.
- The Aspirational Dream: Let’s be honest, it feels amazing to book a flight, especially in a premium cabin, using points you’ve earned from your daily spending. It’s a huge sense of achievement.
- No Monthly Cap (Usually): Most miles cards don’t have a cap on how many miles you can earn each month. This makes them great for very large purchases, like a new sofa or a wedding banquet.
The Cons (What’s the catch?):
- It’s Complicated: The miles game has a lot of rules. Different cards have different earn rates for different categories. You have to worry about points expiring, transfer fees, and finding available seats for redemption. It requires effort.
- It’s a Long Game: It takes a long time and a lot of spending to accumulate enough miles for a meaningful redemption. This is not for people who want instant rewards.
- Miles Can Be Devalued: Airlines can change their rules at any time, requiring more miles for the same flight. The value of your miles is not guaranteed.
Who is Team Miles for?
The miles game is for you if:
- You are a consistent high spender (e.g., spending several thousand dollars a month).
- You travel regularly and have specific travel goals.
- You enjoy the “game” of finding the best redemptions and maximizing value.
- You have large, upcoming expenses to pay for.
The Key Question: What is Your “Cents Per Mile” (CPM)?
So how do you know if your miles are giving you good value? You can use a simple but crucial calculation called “Cents Per Mile” or CPM.
Here’s the formula:
Value of Flight Ticket (in $) / Number of Miles Required = Value Per Mile (in $)
(Multiply by 100 to get cents per mile)
Example:
A flight to Bali costs $300.
It requires 20,000 KrisFlyer miles to redeem.
$300 / 20,000 miles = $0.015 per mile.
That’s 1.5 cents per mile.
A general rule of thumb for a good redemption is 2 cents per mile or higher. If you are redeeming a Business or First Class ticket, you can often get 4, 5, or even 8 cents per mile in value.
If your CPM is low (e.g., less than 1 cent per mile), it means you would have been better off just using a simple cashback card and paying for the flight in cash.
The Hybrid Strategy: Why Not Both?
Here’s a secret from the pros: you don’t have to choose just one team. The smartest players are on both teams. They build a small “portfolio” of credit cards to use for different situations.
This strategy is simpler than it sounds.
- Get one good miles card. Use this as your main card for general spending and for any big-ticket purchases where you don’t want to be limited by a cashback cap.
- Get one or two high-rebate cashback cards. Use these cards only for their specific high-rebate categories. For example:
- Use Card A only for dining, because it gives 8% cashback.
- Use Card B only for groceries, because it gives 6% cashback.
This way, you get the best of both worlds. You maximize your cashback on everyday categories while still earning miles on all your other spending.
Conclusion: Your Spending Habits Will Choose for You
So, miles or cashback? Which is better?
The answer is: Neither.
There is no “best” strategy overall. There is only the strategy that is best for you and your unique lifestyle.
Don’t choose a card because your friend says it’s the best. Choose the card that rewards you for the life you already live.
So, here’s your call to action. Take a look at your bank or credit card statement from the last month. Where does most of your money go?
- Are you a consistent, high spender who is saving up for a big trip? Team Miles might be your calling.
- Do you prefer simple, no-fuss savings on your daily meals, groceries, and transport? Team Cashback is probably your perfect match.
Your spending habits hold the answer. Listen to them, and you’ll never leave money on the table again.