Thursday, January 3, 2008

Maximising credit card rebates

Nowadays redeeming cash rebates instead of reward points are getting more popular with credit cards among consumers. I find cash rebates is a better system as you can make use of these rebates to offset your necessary future bill payments. So depending on which credit cards you use, you can actually receive maximum cash rebates. Let me just share my management of credit cards usage.

So far I have been maximising my credit cards usage. That’s not to say I make use of the full credit limit. I will still spend within my levels of affordability but be selective on which credit cards to use for various transactions.

All my purchases and bill payments are charged to credit cards. And all my credit card settlements are done through giro. I have been practising these arrangements for the past few years effectively. Let me just summarise its advantages.

1. Cashless transactions
2. Easy for record filing purposes. Just monitor or keep credit card statements
3. Hold payments till credit card statements due date. Enjoy time value of money
4. Hassles free credit card settlements. Automatic giro deductions from banks
5. Earn maximum cash rebates

So now the question is how do i maximise rebates? It has been an ongoing process for me to look out for the best rebates given for a particular credit card. Let me just summarise the various arrangements for all my credit card transactions.

As you can see, the list I show consists only the necessary and most common type of transactions one has to make. I don't own a house yet so I am not paying utilities bill. Also to add, I am not a shopper or a high class diner. Therefore I am not interested in what are the best rebates for Levis jeans, Versace perfume, fine dining at restaurants, etc.

In conclusion, if I don't make use of the credit cards, I would have foregone an opportunity to receive back $76.20 at the end of the year. Now the question is at what cost do I need to pay to enjoy these rebates? After using credit cards for several years, I have never paid for any annual membership fees!


Sam said...

Hi Mike, your blog is very informative.

I have a few questions regarding credit card settlement via GIRO.

1. Will the GIRO deduction only be made upon the credit card statement due date? This will help maximise the interest-free repayment period.

2. Must the credit card and bank account to be linked via GIRO be of the same bank? e.g. if paying my UOB credit card can I make the payment via GIRO from my DBS account? Any risk of missing the due date since it takes a few days for the money to move between banks? Or is it better to pay via a UOB bank account. Reason I asked this is because I prefer all my payments to come from 1 account for easier monitoring.

Mike Dirnt said...

hi Sam, thanks for visiting my blog.

1) giro deduction on due date for posb/dbs credit card. i believe the other cards are the same as well. isnt that good? maximum interest free credit. if you pay axs or sam, do you dare to wait on last day?

2) no. you can use giro from any banks to pay any bank bills.

so thats why posb is kept only for my giro deductions purposes. you are right 1 account, easier to monitor!

Mike Dirnt said...

by the way, read my later post. i have arranged all my bills to be charged under UOB one card. see its advantages. but if you unable to achieve the minimum spending, then its good to spread like what i did.

Sam said...

Thanks Mike for the quick response and clarification. I pay online rather than by AXS/SAM, and I have these little reminders in my phone's calendar just before the various due dates. Even then its still a chore, especially if I'm travelling. I'm definitely switching to GIRO.

Yes I read it, along with all your other posts in the Credit Cards and Financial Stuff sections, mighty impressed... I'm going to get the One Card too and link it up with my EZ Link card.

Sam said...

I just spoke to my wife about paying credit card bills through GIRO. She mentioned that one of her concerns was that she would lose track of transactions, such as annual fees and bogus charges, especially for those cards that don't send paper statements.

Would just like to ask if you could share how you keep track of these transactions to avoid such situation.

Mike Dirnt said...

well that is the thing that most people fear. instead of spending time to queue at the sam or axs, which i find irritating at times, i rather spend the same time to monitor my transactions.

basically i got an excel file to keep track of all my credit card giro. 1 sheet of excel for each month. so on each sheet i will list all the details by banks like DBS, UOB, Citibank including other organisations like insurance which are paid by giro.

when i receive the statements, i will key them in the excel, so in other words i check them. i will expect the same amount to be deducted from POSB(this is where all my giro are) on the date of deductions. so on the actual dates, just counter check the amount with your tracking in excel.

it all depends on how discipline you are to check. IMO, i would rather have paperless because i dont like to receive thick envelopes. most of the time i check my bill online before i even receive the statements.

Sam said...

Thanks Mike for sharing. You've got some good habits there that a lot of us can learn from.

I also prefer paperless. Save the environment!

Hapi said...

Hi Mike!

Truely enjoy reading ur blog. It's really very useful! Thanks!

Like to hv ur comments on how I can maximise my cash rebate.

Cards I;m currently using:
Citibank SMRT Card- For public transport ($130 per month)
SC Prudential Card- For payment of prenium ($2,000.00 per year)
DBS Exxon Mobile Card- For my partner's petrol ($300.00 per mth).

Miscellaneous spending on CC will be about $200 (inclusive of abt. $30 M1 bill). Which card would u advice that these misc. spending be charged on?

I've no major other bills/loans to pay.

Will having a SC Xtra Saving a/c be beneficial?

I'm looking to open a savings a/c to save up a $20K, was considering SC e-saver till I came across this Xtra Saving a/c which seems to have more perks.

Looking forward to your advice!

Big Thanks!

Mike Dirnt said...

Hi Hapi,

thanks for dropping by.

when choosing a card, try to compute the effective cash rebate in %. the higher is the better. for example, $5 rebate for $100 spent that means is 5% rebate which is considered high.

ok here are my suggestions.

1) apply for UOB one card and link your ezlink to auto top up with UOB one card. your miscellaneous plus transport is same like mine about $300 per month. so use UOB one card for miscellaneous and transport. read more on my UOB one card in my blog.

2) i believe your insurance is from prudential. so you got no choice but to stay with SC Pru card to earn poins/rebates. if you use other cards for insurance, i dont think you can earn rebates.

3) for petrol check the rebates in % with your current card and compare with Xtrasaver effective rate of benefit. see which one is better. use this calculator:

4) xtrasaver account is useless for savings but you earn better rebates when you use the card. so keep 6 to 7k here and the balance in e$aver or maybank isavvy

the reply is abit long, so i hope you find time to digest. :)