As far as new year’s resolutions go, the most common one — after “I will get fit” — probably revolves around spending less and saving more.
Considering that a big number of us save only what is left after spending unwisely, that’s one resolution that’s set up for failure — particularly when Chinese New Year is coming up, and there are shopping deals galore.
Perhaps then, the aim should be to benefit from your spending instead.
An Outdated Mantra
“Spending less and saving more” — this may have been realistic in a pre-digital world, but now that shopping is so tantalisingly easy (just click on the “add to cart” button), it’s not surprising most of us are left with a hole in our (virtual) wallets. And with interest rates near 0%, saving more means all that money in your bank account is worth less over time, thanks to inflation.
So if spending less is unlikely and saving more is not helpful, the only logical conclusion is to invest, or to somehow benefit from your shopping. If your eyes glazed over at the mention of investing, fret not, we’ll just focus on the spending (yay).
Cash is King…
…Just kidding. Your credit card is the real king, one that could do you a lot of favours, as long as you pay it off on time. If you have to buy something anyway, why not get something in return? While paying by cash gets you nothing in added value, credit cards give you points. Depending on the type of card you have, these points can be converted into miles, cashback (rebates) or rewards (free stuff).
Different cards are optimised for different spending patterns, so you should choose a card that rewards the kind of shopper you are. For example, certain cards give you more points on online shopping while others give you more points for spending on certain kinds of purchases, like, “lifestyle” purchases, i.e. that new mascara from Urban Decay. There are several websites out there like Gobear and Moneysense that help you choose the best card, tailored to your needs and spending habits.
Travel in Style, for Free
If you’re an avid traveller, what you want is miles. Some cards are optimised to give you exactly that. Let’s consider a scenario where you’ve obtained a card that gives you four miles for every dollar spent, like the HSBC Advance Visa Platinum Card. Let’s also say you spend about SG$3,000 a month. That’s roughly 12,000 miles a month and 144,000 miles a year. What does that translate into? A round trip business class flight to London — essentially for free. Don’t believe me? I hate to brag, but since you asked: I booked a suites class ticket on Singapore Airlines to London, paying just S$230, plus miles accumulated. If I had bought a ticket, it would have cost me a cool S$19,000.
Another tip is to mix and match cards for different types of spending. There’s no rule saying you can only have one card. If you’re making online travel bookings, be it accommodation or flights, there are cards that can earn you a whopping 6 to 10 miles per dollar on travel bookings. And if you’re worried about multiple annual card fees, don’t — in my experience, most banks will waive the fees if you ask, seeing that you’ve been ‘a good customer’.
Easy as Pie
If you’ve got a memory span like a sieve, here’s my tip: try tagging your cards with sticky notes to remind you which one to use according to the purchase. For the app-savvy, there are apps like Wallaby that go a step further, telling you which cards to use depending on the store you’re in!
So, this new year, do some retail soul searching and find your credit card soul mate. Attainable goals should be the theme of 2017 and armed with the right credit card(s), you’re one swipe closer.