Can Singaporeans Actually Save Money With Credit Cards?

Many Singaporeans think credit cards are synonymous to debt. In reality, credit cards can help you save money if you use them responsibly.

First published on 6 August 2015. Updated on 26 September 2016.

Credit cards are one of the most misunderstood bank products. Many Singaporeans think they are synonymous to debt. In reality, credit cards come with a lot of benefits that can help you save money on the things you love.

Using credit cards to save money comes down to discipline. If you lack self-control, you are not likely to save money with or without credit cards. If you make it a point to understand how credit cards work, and you exercise the right kind of restraint, you can save significant sums.

Here's how Singaporeans can use the right credit cards to their advantage, and save money in the process.

1. When Cashback and Related Rewards are Gained without Interest

All credit cards come with some range of rewards. The most common are cashback (receiving back a percentage of what you spend), reward points (which can be traded for vouchers or air miles), and direct discounts.

If you do not incur interest rate charges on your credit card, these rewards effectively lower the cost of your purchases. So as long as you repay the credit card in full, you are saving money by using the card as a mode of purchase.

2. When Credit Cards are Optimised for Purchases

Credit cards will save you money if you use the right card for the right purchases. For example, some credit cards are designed for motorists, and give great rewards for petrol purchases, but none for shopping. Some credit cards greatly lower the cost of air travel but don’t help out with much else.

The key to saving money is to match the right card to the right purchase.

3. When They Offer Extra Services That Make Life Easier

In addition to points and miles, credit cards offer services you'd normally have to pay a bit of money for. These include things like free airport lounge access or complimentary travel insurance when you charge your flight tickets to that card. Citi PremierMiles Visa Card is an example of a credit card that offers these extra perks.

Always check to see if your credit card can offer a better rate than the usual service providers.

4. When You Use Them For Exclusive Discounts

A common trick is to use your card at restaurants, bars, and other establishments that offer exclusive discounts to cardmembers. When you pay with your card at these places, you can get 10% off the total bill or one-for-one deals on mains. Our list of Citibank buffet promotions and OCBC credit card dining promotions show some good examples of how much you can save at Singapore's best restaurants.

Doing this also helps you earn points and miles faster. For example, you are dining at a restaurant with five friends, and the bill amounts to S$230. You could get your friends to pay their share to you in cash, and charge the full S$230 on your credit card. This will increase reward points or cashback without costing you anything - as long as you pay your bill in full when it's due.

These Only Work if You Spend Responsibly with a Credit Card

Remember that you only get charged interest if you have an outstanding balance. The trick to saving money for a credit card is to pay back the full amount so that the interest rate is irrelevant (24% of $0 is still $0).

What this means is that you should only use the credit card only as a mode of payment, and never for actual loans. Do not spend more than you can pay back, even if the card allows you to. If you charge S$500 to your credit card, make sure you pay back S$500 before the next billing cycle.

If you need more cash than you have available, you should consider a personal instalment loan instead of using a credit card. Personal loans only have an interest rate of 4% to 8% per annum, whereas most credit cards have an interest rate of around 24% per annum. In addition, you can repay what you owe in fixed instalments every month. This makes it easy to make payments without disrupting your cashflow.

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