How to maximise credit card rewards and beat inflation

By now, we are no strangers to inflation. Talk about high inflation has dominated the news cycle for months as countries all around the globe face rising prices in the wake of the pandemic. Singapore is no exception.

After taking into account the GST increase from 7 per cent to 8 per cent, Singapore's headline inflation is projected to remain around 5.5 to 6.5 per cent and core inflation is expected to be 3.5 to 4.5 per cent in 2023. This is the highest rate of inflation Singapore has experienced since November 2008.

Needless to say, many of us are already feeling the pinch. Across the board, everyday spending from dining out to retail shopping has become increasingly expensive.

While it may sound like we have no choice but to accept that our wallets are going to hurt for the foreseeable future, there are ways that we can take control of our spending to save some extra cash.

Fear not, credit cards can help

While there is nothing we can do about the rising prices, there are ways to get the most out of your spending.

One great way to help curb the effects of inflation is to make use of financial tools, such as credit cards to earn rewards, cashback or miles on your regular expenses.

Finding the right rewards programme for you could result in hundreds of dollars of savings on spending, which you were going to incur regardless. Now who wouldn't want that?

Here are some things to look out for when deciding what card works best for you.

Choose a card that matches your spending habits

Credit card rewards are only helpful if you are able to earn rewards without increasing your spending.

One trap that some people may fall into is signing up for a credit card because they are enticed by the high cashback or miles perks, only to find themselves spending more than they otherwise would every month in order to meet the minimum monthly spend requirements to even qualify for the rewards in the first place.

This is extremely counterproductive and is unlikely to benefit you in the long run.

One way to prevent this is to look for credit cards with no minimum spending. This ensures that you are able to benefit from your current level of spending without subconsciously inflating your spending just to hit reward spending requirements.

This is especially important if you have a low monthly expenditure.

• Pros
  • Unlimited cashback
  • No min, caps or exclusions
  • American Express Card privileges
• Cons
  • Low cashback rate for smaller budgets
  • Annual fee

One good example of such a card is the UOB Absolute Cashback Card. This card offers unlimited cashback of 1.7 per cent with no minimum spend and no spend exclusions. This means that you can get 1.7 per cent cashback regardless of what category your spending falls under. This is currently the highest cashback rate with no minimum spend in the market.

The UOB Absolute card is the only credit card in the market to award Grab mobile wallet top-up transactions. You can earn 0.3 per cent cashback from GrabPay top-ups which can be used to make payment at places that only accept PayNow/GrabPay payments like hawker centres, etc.

One of the biggest perks of the UOB Absolute Cashback Card is that there are no spend exclusions to earn cashback.

Most cards have excluded insurance, healthcare and utilities bills. This means that you can earn 1.7 per cent cashback on all of your spending, including big purchases such as travel bookings, luxury shopping, home furnishing and more, insurance payments, school fees, mobile wallet top-ups, healthcare and medical bills, utilities and telco bills and even your monthly rental payment.

As these types of spending are often in the hundreds, if not thousands of dollars, being able to maximise these essential but costly expenses to earn rewards will save you a significant amount of money in the long run. This is another great way to increase your savings without inflating your current expenses.

Such a card is particularly suited for those who prefer simplicity and do not want to track their spending to make sure they qualify for the rewards. With no minimum spend and no spend exclusions, you have the peace of mind that you are always earning cashback rebates when you spend.

On the other hand, if you find that your spending tends to be concentrated within specific categories, such as fashion, dining or even transport, then a no-minimum-spend credit card like the UOB Lady's Card might be more up your alley.

Look for flexible rewards

UOB Lady's Card lets you choose the rewards category(ies) that earns you the most with no minimum spend required. What's more, change your rewards category(ies) every quarter as you please to maximise your rewards.

• Pros
  • High miles rewards (30 miles per $5 spent) on one category of spending
  • No minimum spend
• Cons
  • Cap of 2,800 bonus UNI$ (5,600 miles, equivalent to $1,000 spend) per month
  • Points have a two year expiry

With the UOB Lady's Credit Card, you can earn 15X UNI$ (or 30 miles) per $5 spent on your preferred rewards category(s), be it travel, shopping online or in stores, locally or overseas.

UOB Lady's Cardmember can choose up to two rewards categories from the extensive list of seven curated categories to fit the needs of every Singaporean lady. The categories include dining, fashion, travel, beauty and wellness, family, transport and entertainment.

Plus, cardmembers have the flexibility to customise and change their selected categories every quarter to maximise their rewards.

For instance, with travelling becoming more rampant, a Lady's Cardmember can choose the Travel category to earn accelerated rewards on her travel related spend. During festive periods, a foodie can select the Dining category to maximise her rewards while dining out.

So how can one further maximise rewards on the UOB Lady's Card?

Cardmembers can select one rewards category and earn up to 3,000 UNI$ ($1,000 spent) per calendar month (equivalent to up to 6,000 KrisFlyer miles*). Within six months, you can potentially earn up to 18,000 UNI$ (equivalent to 36,000 KrisFlyer miles), enough for a round-trip Economy Class ticket to Taiwan^ or two round-trip Economy Class tickets to Bali^.

The best part is that UNI$ rewards are extremely flexible to redeem. In addition to being able to convert your UNI$ to KrisFlyer miles, you can also convert it to cash credit, vouchers or instantly redeemed at the point of purchase at some of your favourite retailers.

Accumulating rewards by taking advantage of your current spending habits is a foolproof way to use credit cards to combat the rising cost of living.

Last but not least, UOB Lady's Cardmembers can also enjoy more savings with exclusive deals tailored to suit their lifestyle preferences - including one-for-one dining deals, complimentary room stays, discounts at popular merchants, shopping perks, spa promotions and more. Cardmembers will also enjoy exclusive birthday offers on their birthday month.

* Cardmembers can choose to convert their UNI$ into air miles at the conversion rate of UNI$1 = two miles.

^ Based on Singapore Airlines Saver Awards chart rates effective July 5, 2022.

Maximise your rewards on essential spend

Another great way to really maximise your credit card is to earn rewards on your essential daily spending.

• Pros
  • Good fit for budgets of at least $2,000 per month
  • Easy cashback on daily spend
  • Gives rebates for paying bills
• Cons
  • Doesn't fit high budgets or low/inconsistent budgets
  • Annual fee

A great credit card to leverage your essential daily spending is the UOB One Credit Card. With the UOB One Credit Card, you can earn up to 10 per cent cashback on your essential daily spend such as on groceries, transport, online shopping and more.

With a minimum spend of $500, $1,000 or $2,000 a month, you earn 3.33 per cent cashback on your regular spending and an additional 5 per cent or 6.67 per cent cashback when you spend with UOB partners such as Grab, Shopee, SimplyGo, Giant, Cold Storage, 7-Eleven and more.

This makes the total cashback you can receive on grocery, transport and online shopping takeaways 10 per cent. On top of this, you can also save on fuel with up to 22.66 per cent fuel savings at Shell and SPC.

And that's not all. New-to-UOB credit card members who apply for the One Credit Card before June 2023 will receive an additional 5 per cent or 6.67 per cent cashback as part of an enhanced cashback promotion, making the total cashback you can receive a whopping 15 per cent!

As grocery, transport and online shopping are essential spending that you are unlikely to reduce despite rising costs, being able to combat some of this rise in price by taking advantage of cashback credit cards is a great way to offset inflation.

With a headline inflation of 5.5 per cent to 6.5 per cent, the 10 per cent to 15 per cent cashback more than accounts for the rising prices we are currently experiencing.

Another great advantage of the UOB One Credit Card is that it is part of the UOB One ecosystem. UOB is now offering interest rates of up to 7.8 per cent p.a. if you credit your monthly salary into your UOB One Account and spend at least $500 on your eligible UOB debit or credit card, of which the UOB One Credit Card is included.

By choosing the UOB One Credit Card over a debit card, you are stacking your rewards by not only earning high interest on the amount you save every month in your savings account, but also earning cashback on the amount you spend every month on your UOB One Credit Card.

Rack up miles to offset travel spend

If you are a jet-setter, a miles credit card is your best friend. Travel has become increasingly expensive in recent months as countries around the world reopen their borders to tourists.

Miles credit cards are a straightforward way to offset rising travel costs. Not only do they offer miles rewards on your normal expenses, they often also come with many travel-related complimentary perks that can add up in terms of savings in the long run.

• Pros
  • Great for rapid miles accrual
  • Awards high spend on airlines & hotels
  • Annual fee waiver with Amex card
• Cons
  • Doesn't fit infrequent travellers with mostly local budgets
  • Lacks luxury perks & privileges

One great example of a high-reward miles credit card is the UOB PRVI Miles Card. With the UOB PRVI Miles Card, you can earn 1.4 miles per $1 of local spend and 2.4 miles per $1 of overseas spend.

Online shopping purchases on overseas websites also count as overseas spend, meaning that you will be able to earn the upsized miles rewards on your Taobao hauls.

You can also earn six miles per $1 spent on airlines and hotel bookings with Agoda, Expedia and UOB Travel via the dedicated PRVI Miles card website. These travel-related upsized rewards are perfect for those who are always on the go as this would greatly increase the miles rewards you can collect.

Just how attractive are the miles rewards? Let's crunch some numbers.

A round-trip flight to Bali with Singapore Airlines can be redeemed with 17,000 miles. This translates to $12,142 in local spend or $7,083 in overseas spend.

With a combination of both local and overseas spend, a moderate spender with a monthly credit card bill of $1,000 can reasonably expect to redeem a free flight on the full-fledged airline carrier in less than a year.

Being able to save on your airfare through redeeming miles rewards would greatly reduce your travel expenses.

A word of caution

While there are many benefits to using a credit card, you can find yourself in a bit of a pickle if you don't pay your credit card bills on time.

As credit cards charge a high interest-rate of 27.8 per cent p.a. compounded daily, if you do not pay your bill in full every month, before you know it, you will find your credit card debt ballooning out of control.

This would more than wipe out any savings you make from the rewards given by your credit card.

If you are not able to pay off big-ticket purchases at the end of the month, make sure to look out for credit cards that offer zero-interest instalment plans as these can help spread out your bills into more manageable payments so that you don't break the bank.

UOB Lady's Card lets you choose the rewards category(ies) that earns you the most with no minimum spend required. What's more, change your rewards category(ies) every quarter as you please to maximise your rewards.

• Pros
  • High miles rewards (30 miles per $5 spent) on one category of spending
  • No minimum spend
• Cons
  • Cap of 2,800 bonus UNI$ (5,600 miles, equivalent to $1,000 spend) per month
  • Points have a two year expiry

The UOB Lady's Card is one such credit card. It offers LuxePay, a zero-interest instalment plan that allows you to break up big purchases of $500 or more into smaller payments over six or 12 months to avoid the burden of a lump-sum repayment.

Your purchase is eligible for LuxePay as long as it is made with any online or in-store retailers (both local and overseas) that sell shoes and bags as their main business activity.

By breaking up your payments into smaller instalments for zero interest, you will be able to afford the luxuries that you have been eyeing without incurring any additional interest.

Conclusion

Credit cards are very powerful financial tools that can be extremely helpful but also hazardous when not used responsibly. As the cost of living continues to increase, it is crucial to take advantage of the benefits that credit cards can provide for your personal finances.

If you think that credit cards are the right next move for you, make sure to capitalise on any sign-up promotions to truly get the most bang for your buck.

For the month of July, UOB is offering an attractive promotion to new credit card applicants: the first 200 new-to-UOB credit cardmembers will receive $350 worth of cash credits or up to 50,000 air miles. All you have to do is apply for your credit card by July 31, 2023 and spend a minimum of $1,000 per month for the first two consecutive months from your card approval date.

ALSO READ: 9 best air miles credit cards in Singapore (2023)

This article was first published in ValueChampion.