Is there a right credit card for you?

You're listening to AC N A podcast. Hello, I'm Andrea Heng. Welcome back to the Money Talks podcast. I hope you've been enjoying the topics we've put out on this podcast so far. If you haven't listened, we highly recommend a limited series called This or that where we got our guests to pick one financial option over another from housing to cars to lifestyle packages. We also took a look at alternative investments that people are really getting into, namely find

Andrea. Ok, thanks for having me

first. I must ask you how many credit cards do you own

personally? Just one? Wow, just

one. Ok. What kind of credit card is this one credit card? I

particularly like the cash back category. So credit card. Ok.

So you think that that's like the best for your lifestyle, your preferred spending habit, correct? What is your spending habit on that card? And how do you then divide your spending between cash and

credit? I have quite consistent spend every month and typically it's around like necessities. Secondly, I'm a hassle free person not to

be that kind of

person and being hassle free. I just prefer my rewards to be a cash back, which is a cash rebate and I don't have to be worried that I don't redeem the cash rebate because it's automatically offset. Whereas certain categories like air miles or reward points, you have to remember to redeem it. Imagine doing all that work and forgetting to redeem

it. Yeah, it sounds like a very simple task and that's how they sell it to you as well, but it actually is a lot of work and you miss the deadline. That's it. Exactly. You lose all your accumulated points in miles.

I know personally of people who would build their own kind of like spreadsheets to calculate how many rewards from, like, 4 to 5 different credit cards. But that's not me.

I don't, yeah, I don't have time to update my personal spreadsheet, let alone for four credit

cards. Exactly. But I think to be fair from the stories and experiences of my friends in the initial years is to get into the habit, you may miss one or two rewards and everything. But what I heard from my friend's personal account is they took like maybe a year and year and a half to build up their habit. But once it becomes a bit of a muscle memory, I heard that on a weekly basis it doesn't take too much time.

They must have a different brain function that I don't have so different cards have different rewards and there are just so many to choose from it. Boggles my mind. Am I really losing out if I don't own a credit card with some kind of reward pack to it?

If you're going to spend on something anyway, you should definitely have at least one credit card. Lah. Because you're going to spend, you might as well maximize your spending right? And spend more effectively

reward yourself with that spending.

Yeah, if you're going to spend on like necessities, you might as well have one credit card. But if, let's say on the other spectrum, if you're only going to spend the X amount and because you're looking at all the different credit card points and you end up having like four or five credit cards and you end up racking up like maybe two or three what you actually wanted to spend then as you said, you know, it's a double edged sword, not so good.

Ok, so say I'm shopping around for a credit card, so many out there, right? And to help me choose one, a big reference point tends to be without a doubt the benefits, the perks, the rewards, right? So in your experience, how do people choose a card? So for instance, I have one that has say my mortgage loan on it with the bank or I open a fixed deposit account with them.

I think that's the ideal case, but in reality, like we said, it takes a lot of work to get there. I think we can follow a very simple like just three steps first, evaluating spending habits and amount. Secondly, ask ourselves a very honest question, right? Everyone likes to be rewarded, ascertain what kind of rewards that you like? I think a lot of Singaporeans, they love to travel. It's nothing wrong to, to rack up air miles and to fly for free. Some people even have like goals

know someone who has actually written a guide book on how to chase air miles on credit

cards. I probably know that person too. But and once you ascertain these two things, then you go into comparing what kind of card. So for example, if it's cash back air miles or say rewards within that category go and compare and I think simply put to compare, just take note of three things. One is the reward terms and conditions. So this first bucket is where we have to open our eyes a little bit more to look at the best kind of reward currency. For example, if you are in

I spoke with someone recently about using a credit card for groceries for everyday spending. And this person told me not to do that. It's a very slippery slope once you do that. But you're also coming from the camp of having the cash back card. What do you say about that comment? Is there

any reason why is it?

I think it was more to do with when you use a credit card for everyday spending and you get the cash back on that the reward versus the actual spend didn't add up or something

like that. Ok. So I use my cash back credit card for everyday spend. And I think what your friend is saying is true, right? But that's on one spectrum that you want to optimize to get the best kind of cash back and the best kind of rewards in that sense, maybe a cash back card is not so good. Maybe a rewards points, credit card which gives you actually more points that you have flexibility to choose what kind of like products or vouchers to

for me. Ok, so you are. No man in the. Hello, everyone. My name is Christina and I'm Adrian and we're the host of a podcast called Work It if you never heard of it. Well, it's a good time to tap in, in the last three episodes. We've discussed topics like how to negotiate for a salary increase or how to get along with younger colleagues who have different values from you. Incidentally, it is our top performing episode if work consumes your life and you want some perspective on issues like

first place. It depends. But I would say as a blanket rule, the fee paying cards have better benefits than the non fee pay. Oh, interesting. Right. The annual fee is predominantly there. The maintenance of the credit card benefits and some of the operations around it also, it adds on to the prestige of the credit card that's on one side. But on the other side is if you have a fee bank card and you don't utilize those benefits, it is also wasted.

Of course, then you're paying upwards of 90 to 100 and $20 per year for something that's just going to collect dust in your wallet. And

when you use it for a fancy meal meal, one time purchase,

how many is too many when it comes to credit cards? Because I know of people who actually get a kick out of maximizing the rewards of each credit card they own. I know someone who has four. I know someone who has six and then there's people like you and me, we only have one. Where do you stand on

this? I think based on the data point that I saw done by you gov in 2019, that research actually says that more than three quarters of Singaporeans have at least one credit card and slightly more than half 50% of Singaporeans have two credit cards. Only about 10% have six cards or more. So that kind of frames your question. The deal hunters or what I call the power. Users of credit cards are probably like 10 15%. It

So your team want credit card, as I said earlier, would you go for a second credit card? Do you think in the

future? I think it's a good question. The answer is likely to be yes reason because travel has reopened up. Right. And being a cash back reward person, I'm only earning cash back from my spend. Right. But if I'm planning, let's say a big trip a couple of years later and air miles credit card would be good. And I know for a fact that most families have two or three cards spread

across. Yeah, I was gonna ask about that as well. Yeah, the families operate differently. So then they will have different credit card for different types of expenses. It's very

fair to have one cash back card and maybe an air miles or rewards card to actually rack up both sides of the rewards.

Ok. Buy us aside if I were to have one credit card to rule them all, I kind of think I know the answer to this one. Which kind should I go for in terms of the overall reward, let's say I'm someone who shops quite a fair bit. I like my fashion, but I also need it for certain household expenditures. What would be the best overall card for someone whose spending habits are similar to mine? I

would think if there's only one card to rule them all, probably a reward points card would be good because the whole value proposition of a rewards points card is it's flexible that reward points that you accumulate with the bank's reward catalog allows you to get rebates or vouchers or redeem products even transfer those points into air miles if you want to travel. But just one thing to take note how appealing the reward points is really depending on how appealing the catalog is.

Of course, because if it's going to give me brands or products that I don't typically use and what's the point, right? Ok. So one thing that we've seen an increase of is the number of alternative payment methods. Obviously, I'm talking about buy now pay later schemes, right? These are apps that allow you to break up large amounts into smaller payments, more manageable payments usually in installments of three months, right?

I don't think buy now pay later would put the traditional credit card players out of business simply because credit cards also allow one to take an installment payment plan for big purchases for much longer too. Exactly, for much longer for buy. Now pay later, it's a different kind of mechanism other than using credit cards. And not everyone would get into the behavior of downloading something new to

French benefits. Of course, they count as well. Exactly is not owning a credit card at all an option.

That's a good question. I've got some of these questions before. I think it's practical to at least have one credit card. And these are some of my reasons. Right. Firstly, we go back to spending effectively. If you're going to spend, you might as well get some rewards. Secondly, having a credit card actually builds up your credit score. Right? Yes. Right. Especially for new to credit card users. And thirdly it helps you is your cash flow or it gives you a higher

question to you before I let you go. Is there such a thing as a bad credit card to get?

Probably first time somebody has asked me that bad credit card. I don't think there is a bad credit card per se, but I think what is not a good use of credit card is just to get it for the sign up bonus. And let's say if you forget to make certain payments and you end up incurring fees that you can't waive off and you're just having that like thick many plastics in the wallet, right? Which actually rack up fees that you don't know of. I think that would

card. Right? Didn't mom and dad warn you about the dangers of credit cards? Mine certainly did. But if you're a rewards king or queen and you're able to keep those credit card bills in tip top shape, then go ahead and burn that plastic. But if it's just too much of a hassle know that there are singular options for you, including not owning one at all. Thanks very much for laying out all the cards on the table and seeing which ones I was playing or in this case. Hey,