Singaporeans have a reputation of being thrifty and while looking for ways to save have its own advantages, the zeal to save often leaves many products underutilised. One such product is the credit card. Credit cards have long been seen as instruments synonymous with debt and temptation. But when these credit cards are utilized correctly, they can give your savings a tremendous boost.
The only way to take full advantage of a credit card is to manage the payments effectively. Credit cards demand a modicum of discipline and consistency in payments. Only then can one begin reaping the benefits.
Here are a few ways in which you can maximise your savings with a credit card.
Most credit cards offer some form of reward to the customer. These rewards even make up the very nature of the credit card. We have cashback credit cards that offer some cash rebates, travel credit cards that offer air miles and reward credit cards that offer reward points on every expense charged to the card.
The cashback credit card is the most common type of credit card opted for by cardholders looking to save. When timely payments are made towards the credit card statement, the cashback helps in reducing the cost of the purchase as compared to purchasing using cash.
Use it for the right purposes
As we know credit cards have been catered to different segments of consumers. For example, a petrol credit card might offer great cashback and discounts at select stations but do little to nothing for any other expense such as buying groceries.
If you need to buy petrol, you would fare much better using the DBS Esso MasterCard which would give you savings of up to 17% as compared to using a UOB Delight credit card that won’t offer any savings. Hence when using a credit card to save, it is imperative to meet the expense with the right type of credit card.
Tie-ups and discounts
Many credit cards not only offer some form of savings through cashback or reward points but offer discounts at exclusive outlets. When added to the benefits of the card, it makes for far greater savings.
For instance, the Citibank credit cards have the Citi Dining privileges that offer cardholders discounts of up to 10% on the total bill at Amara Singapore, Silk Road or 15% off on beer at the Orchard Bar, Intermezzo Hotel.
Charging items that you would normally purchase through the month with cash can be shifted to the card to achieve greater savings. When planning your monthly budget, use a groceries credit card to buy the required groceries and use the cash you would have otherwise set aside for groceries to pay this bill.
Ensuring that the payment is made in full before the next billing cycle helps you avoid any interest charges and thereby helps in lowering the cost of your purchases.
The best way to save with your credit card is when you make full outstanding payments on your balances. This is because most credit cards come with an interest-free period wherein you don’t have to pay interest on your purchases. For instance, UOB Credit Cards offer interest-free periods up to 21 days from the purchase date, HSBC Credit Cards interest-free periods up to 20 days from the purchase date and so on. Maybank Business Platinum MasterCard offers an interest-free period of a whopping 51 days from the purchase date.
This way you get to buy your essentials and pay for them later and at the same time save on interest as well. However, remember that interest-free period on your credit cards will only be applicable when you pay your outstanding balance in full.