What to look for in a credit card

SINGAPORE — What’s the best credit card, and which one should I get? It’s a common question among friends, especially for bankers, and it seems like the answer should be easy. In reality, though, the tremendous variety of credit cards means that the answer is more complex.

Perks are popular

While picking the right card seems like it should be a simple matter of going online to look through offers from various banks, the mix of benefits makes selecting the right card complicated.

For many people, rewards or cash back are the most important factors in selecting a card. There are plenty of options, so even just looking at a few of them offers a dizzying array of choices.

A good first step is to look at where you spend your money. The best card for you often depends on whether you spend the most on online shopping, travel, restaurants or something else. You’ll also need to figure out how much you spend in the categories, though, since there can be conditions for getting the biggest benefits.

Next, you’ll need to decide whether you want cash back or other rewards. While cash back puts money back into your account, points or airline miles can be better if you want particular items.

Over time, cash back cards have become the most popular cards in Singapore. While most cash back cards start by giving back about 1 per cent of spending, some offer much more: The ANZ Optimum card offers 5 per cent back on one category such as travel or shopping, and spending at least S$2,000 per month with the UOB One Card gets you S$100 cash back. The Citibank Cash Back card rewards foodies with 8 per cent back at supermarkets and restaurants, while the CIMB Platinum card gives 10 per cent back on airline tickets.

Airline mileage is another popular perk, with most airline-linked cards giving at least 1.2 miles per dollar of spending. Some cards offer more, with one example being the UOB PRVI card which ups that to 1.4 miles per dollar locally and 2.4 miles overseas.

Cardholders who prefer more traditional points that they can redeem for gifts can look for cards that give bonus points in specific categories, such as 5X points for dining with the HSBC Revolution card or 10X points for online shopping with the UOB Preferred Platinum card.

One condition to look out for is how long offers last. The 3 per cent rebate on the American Express True Cashback card drops to 1.5 per cent after 6 months, for instance, while the whopping 26.6 per cent rebate on fuel purchases at Caltex with the Standard Chartered Manhattan World card only lasts only through November.

Beyond rewards

Beyond rewards, there are a variety of other factors to consider in selecting a card.

Discounts are another popular benefit to look at, especially if you frequent certain merchants. While most credit cards regularly promote discounts of 10-15 per cent for shopping at certain stores, many cards have temporary or longer-term promotions that offer deals such as discounts up to 50 per cent at some shops or 1-person-dines-free at certain restaurants.

For many consumers, the interest rate is also very important. About one-third or more of cardholders usually don’t pay their balance in full every month, and MAS data showed that those “rollover balances” totalled S$5.2 billion in July. With interest rates on many cards edging up to 28 per cent, the 15 per cent interest rate on the Maybank Platinum card or the 23 per cent rate on the ANZ Switch Platinum card can be attractive.

While many banks waive the annual fee when you call, it is important to consider the fee since it can be more difficult to get a waiver after the first year from some banks. And if you occasionally don’t pay your bill on time, it can cost you more than S$50 each time you’re late.

Some cards also give special offers that can be important, depending on your lifestyle. The OCBC Robinsons card gets you access to member-only sales and special discounts, for example, while the OCBC Arts Platinum card can get you priority booking for some events.

Choosing the right card

Choosing which card is best, then, really does depend on what you value most.

Rather than looking through every website on your own, an easier way to compare cards is to use online comparison sites such as bankbazaar.sg, get.com or SingSaver.com.sg.

Choosing the right card doesn’t mean you need to choose just one, of course. Even though the minimum income to obtain a credit card is usually S$2,500 per month, consumers held a total of 9.4 million cards as of July and surveys show that the average cardholder has at least 3 cards.

Once you do select your cards, the best way to maximize your benefits is often to focus on using the one or two that give you the best deals.

While there’s no one best card for everyone, figuring out what matters most and comparing cards to find the ones that give the best value specifically for you can provide plenty of benefits.