SG Budget Babe
Asked by Anonymous
Asked 3w ago
Why should I pick miles over cashback if I’m just coming out of university? It seems like miles is for those who travel often and spend more, so im wondering if I should bother getting a miles card instead of one with cashback.
Top Contributor (Nov)
For a start, go for cashback.
Once you get the hang of managing your income, then you relook at your expenses and see if you can afford not to have the immediate cashback or you can afford to enjoy the miles later.
Generally to be able to redeem for a decent trip can be 5-7 years depending on your spending.
As someone who had the same question when I first graduated, the simplest way I looked at it (after reading heaps of articles and blogs) was to ask myself this: am I going to make a lot of big purchases in the near future (ie. wedding or house) and will this be recurring for the next few months or year ahead (after wedding then honeymoon, house renovation, etc.)
If your answer to this question is yes and you value travelling, then it makes sense to get a Miles card as you can easily rack up a lot of points with the bonus sign up promos.
If your answer is no and you are mostly spending on adhoc stuff like shopping and dining, then it probably will be better to get a cashback card as the benefit is almost instantaneous and you don't have to wait so long (as a miles card) to accumulate and reap the benefits.
Top Contributor (Nov)
I used a cashback card for a while, and it worked for a bit, while I spent time delving into the complex world of miles.
It helped that I was tracking my spend very closely, so eventually I was convinced (or convinced myself, I don't really know which, haha) that miles was going to be better for me, I didn't turn back. Of course, it took quite a fair bit of time, during my days, miles card needed $50K annual income, so I spend time gaining knowledge on this area while waiting for my income to creep up.
I guess cashback is good for a start, while you spend sometime understanding your expenditure patterns, in order to decide if you should embark on the miles game.
I would suggest do a comparison of the cashback credit cards you are thinking of, and then follows by the miles cards. Read the terms and understand how each card works.
Some cashbacks have a high minimum spending, some have high cashback % on specific categories, some give you higher returns when use together with its corresponding savings/current account.
Repeat the steps for miles cards (some miles never expire, some give you higher miles for certain spending categories, etc).
Then look at your current spending habits as well as 2-3 years down the road. Also, determine how much effort you willing to keep track your spendings in order to maximise the cashback returns. This would give you a broad idea which card(s) you will fancy.
First card should usually be a cashback for you to use first while you read up more and consider for miles card. This is because miles are a bit tricky (some cards has bonus for categories, some cards has more miles for first X mths etc etc), plus some cards has expiring miles, some miles are depreciating assets when airlines reduce the rewards etc etc.
All things said, have a basic cashback for all unknown situations then take your own sweet time to understand miles.
Depends on your needs.
I will recommend those credit cards that provide monthly cashback instead of quarterly. It'll be much easier as you do not need to track your spending quarterly, which I find it a hassle.
However, if you are those who travel a lot, either personally or work purpose, do consider miles.
Time to choose your camp, miles vs cashback! Haha. Basically, if you like the thought of saving something all the way and claiming it one shot, that would be miles. Whereas for cashback, it's more of you getting returns every month consistently.
You could determine if you are someone who prefers instant gratification (cashback), or you prefer to gain greater value over time (miles). There isn't any right or wrong option to this, but it boils down to which you prefer.
It would be good to have a cashback card for a start to better study your expenses pattern, followed by applying for a miles card if you prefer.
All the best!
I'm a fresh grad too and I choose the cashback route!
I think you can ask yourself 2 main questions:
1) Will you have any upcoming big ticket spending - you will need this to claim the bonus welcome miles
2) How you travel on non budget airlines often?
If your answer to both is yes then you can consider a miles card, if not you should choose a cashback card first and you can get the miles one when you have upcoming big ticket purchases. I understand that it is confusing with the many options/conflicting articles out there. In the end choose the card that fits your lifestyle the most.
I feel that you got to ask yourself- must you fly business class or is seeing cash more preferable?
Personally, I'm mostly on team cashback. Business class is nice to have, but not necessary. 30,000 miles is supposed to be valued at $570 according to various blogs, but all that can get me is a 2 way ticket to HK and that I can purchase at around $250.
It really depends on your personal preference and what your goals are.
For me, I am not a big fan of spending on unncessary items just to accumulate enough to hit miles. Additionally, I don't have a bucket list to fly first class, and have been on business class several times already.
Thus, if you are not looking to travel often on business class, or spend more, I recommend going for cashback!
I would suggest to begin with, you should pick a cashback card for basic expenses and a miles card for bigger expenses (esp one with no expiry of points).
This is mainly because as a gresh grad, the regular expenses arent that huge (obv a generalization here) and its good to see some returns coming back into your account.
However, the bigger things - holidays/ hotels/ trips/ big household purchases rack up quicker than you realise and you would sooner find a hefty number of miles which can enable you to book those luxury flights/ hotels which otherwise would cost a hole in your pocket
I would say get a cashback card if you can fulfil the minimum spend to get the maximum cashback. 😊 if you buy groceries or petrol, it's definitely easier to hit the mon spend to get the max cashback. But if you are like me; I eat out at restaurants 2x a week and 0 spend on groceries or petrol, I rather get miles as it's not easy for me to get the max cashback. Also some miles don't expire. 👍😊
Are you someone who loves travelling and would like to experience premium cabin travel? If so, it’s never too late to start with a generic miles card such as OCBC 90N or Citibank premiermiles where he points/miles don’t expire.
Bear in mind cashback cards usually impose minimum spending in certain categories to achieve the advertised cashback- will you be able to meet those spending fresh out of school?
I had the same situation. And initially I thought of having both. However it is not recommended as it is better to focus on one. I told my boyfriend that we shouldn't apply the same credit card. Each of us should focus on a different aim.
however for a fresh graduate I think is better to have cashback. Because we might not have big tickets to spend on. Best is to look out for those that take insurance as spending or if there is unlimited cashback.
For starters, I'd say go for Cashback.
Reason because you have just entered the working world, the first few years will be the time you set foundation for your finances. You will take a while to learn to manage your finances and to have a better estimate of your own expenditure. After that, a Miles card will make more sense. Just my two cents.
Go for cashback first as you're starting to work after graduating. In my opinion, cashback offsets your spending, while for miles potentially you need to spend to travel overseas. That's my guiding principle and I hope that helps, although from a simple dollar-point perspective, miles would be more sensible in the long run.
Cashback cards are good for start as they provide you instant cashback in monthly statements.
I would suggest that you assess what do you want to get out of a credit card first:
how much do you consistently spend every month
what kind of stuff do you spend your money on
do you travel often (if you don't even travel, miles card doesn't make sense at all)
any big ticket purchases in the future and when
Typically people charge their big ticket items to miles card because 1. it generates more miles 2. miles have little value when in small number. The miles game is a long-term game; unless you're spending like $5000 consistently every month, you won't be able to see your "returns" fast in say, a year's time. And because of that, many people start out with cashback cards first - 1. you see your returns within 1-3 months 2. it's easier to manage and regulate your cashflow 3. it doesn't require as much planning as miles cards.