Asked on 11 Sep 2019
My gut tells me if I keep to my regular spend, I won't earn enough miles for a decent flight. But from the money I didn't spend, I reckon I can save more than the cost of the ticket "earned".
Is there any study to show its actually worthwhile?
Fyi I estimate my own credit spend at about 20k a year, of which 6k are mobile/internet/gym, 3k in travel, 5k in dining/entertainment, 1k in memberships/medical/dental/optical and 5k in shopping/groceries/ pharmacy.
With 20k a year, you can at least exchange tickets to somewhere nearer in business class seat. But if you don't really a travel person, cash back is better.
Top Contributor (Dec)
If you categorize your spend strategically, you can actually up to 4mpd on certain categories. Bonus category spend does accelerate your miles earning and it is one of the fastest ways to build up your balance.
Having said that, it doesn't mean that you should spend more just for the purpose of earning miles. We play the miles game so that we don't leave cash on the table, but we play it wisely. FYI I put $500-$700/month on my cards on average a month, which is not a lot (I'm not a spender by nature), but I have a stash of 250K miles due to strategic spending and taking advantage of sign up bonuses and the like over the years. If you don't spend a lot on cards, then probably you'll want a card where miles don't expire.
Well honestly, it depends. Miles card is a delayed gratification, and cashback card is an instant rebate back to you. Which do you prefer?
I see that most of your credit card spend are local purchases. For miles card, you will get more miles if you spend in foreign currency, or if you use Grab, some miles card give you a higher Miles Per Dollar (MPD), if not your usual miles cards are 1.2miles/dollar.
Also, it is also more worthwhile to claim miles on long haul flights rather than like to Bangkok, in order to be miles efficient.
I did a rough calculation before, redeeming Krisflyer miles to BKK is equivalent to about 1.5% cashback, assuming all your miles are earned locally.
TLDR: Local spending, I prefer general cashback card (HSBC Advance, Stand Chart Unlimited). Overseas spending, I prefer miles card.
Earning miles should not be the objective of any spending. Rather, the right way to look at it is how much miles can you get, what is the best way to accrue the miles, for this particular spending that you need to make anyway.
This applies whether you are looking at miles or cash rebate.
I ll tell you something based on a very easy calc
if you spend $20k a year, lets say all on a basic miles card, you get 24k miles. lets assume you get a sign up bonus, thats about 10k extra.
Assuming you have no bonuses/ category spending whatsoever (which is basically impossible) you still have enough just for a basic flight/ short business flights.
So yes, if you but a bit more effort to this - I think this figure can easily be upto 60-90k miles for your spend
Top Contributor (Dec)
Well, a lot of the spendings we do are necessary anyway, you can use cash, nets or credit card but since credit card pay us cashback or miles, we use cards!
The most worthwhile is you earn cashback or miles on the spending that you are doing it anyway with cash or nets.
Don't spend for the sake of earning miles or cashback, as you probably know, its not worth it! no such thing as "save by spending more!"
20k/year = 80k miles.
That's enough for a Business Class ticket to Australia / First Class ticket to Middle East.
Save another year and you'll get a First Class to USA.
Is that decent enough for you?
For fuss-free cards, DBS Altitude and Citi PremierMiles are great options to start off with. Their miles do not expire as well so huge plus to slowly accumulating these miles, at your own pace.
I found this article (https://milelion.com/2019/09/21/miles-game-starter-pack-four-credit-cards-you-need-to-get-going/) useful as to the different types of cards available to maximise all possible miles so hope it's useful for you too. This could help to accelerate your miles game and reap the highest benefits for your 20k spending a year, based on the various categories.
Do also leverage on one-off sign-up bonus. I would recommend staying up to date with all these bonus via:
SingSaver or MoneySmart. They regularly share sign-up bonus from the various banks, say $250 for signing up for a Citibank card as a new-to-bank customer.
Milelion Roar telegram broadcast channel (https://t.me/milelionroars). They post all (I think?) promotions almost in real time, as well as compile a Weekly Deal Summary to ensure you do not miss out on any promotion. Best of all, it is a channel so no spams! Only the best stuff shared there
All the best!
On the contrary you do not need to spend too much to earn enough miles to travel.
I use a combination of sign up promtion to accumulate 50K+ miles but i only spend $12,000 over a 6 month period.
All of these expenditure are for my usual daily expenses. You need to strateigse carefully to earn miles. However do note most of these promos are one-off. So can't repeat this trick more than once
Ultimately, this depends on how much you value a premium cabin flight (i.e. in First or Business class). Would it be a dream come true for you to experience SQ's Suites in the sky? Or is such a perk irrelevant because (for example) you will be travelling as a family with an infant?
I would suggest that you take a hybrid approach to optimizing your spending...
For the first $500-$1000 of spend each month: Use this spend to qualify for bonus interest on your current account. I'm thinking of the UOB One account here, although there are similar account types from other banks. Besides the bonus interest, you'd also get a decent level of cashback from the card spend.
For all other spend above that: Once you've hit the spending tier, focus all your discretionary spend after that on miles. If you're sticking with UOB, the Preferred Platinum is an easy way to earn miles at the rate of 4 miles per dollar - just use Apple Pay / Google Pay. There are also other cards with similar high earn rates depending on the category of spend.
If you get more than 1 miles card and study which spending so be charged to which card, you might be able to reach your goal (no idea what's your definition of "decent flight"). Because some credit cards can give you a good rate of 4mpd.
Would recommend reading this article (if you haven't) because it gives really good insight on how to manage your expenditure to fund your next travel:
Firstly, we need to have a complete understanding on our cashflow. Through this process, we will understand our earning ability and spending habit. Here is a guide to help you: https://www.blog.pzl.sg/understanding-your-personal-cash-flow/
From there, understand how your expenses have been and consolidate the report for a year. Thereupon, convert them to miles and find out how long it will take to redeem a flight to a destination that excites you.
At the end of the day, the miles game is a game of patience where delayed gratificaation is the pivot. Otherwise, go with a cashback card.
Here is everything about me and what I do best.
I break my answer down into a few parts.
Why get miles instead of cashback on credit card spend?
Because there is no minimum spend to hit before unlocking a higher tier of cashback. Cash in point, Citi Cashback card and OCBC 365 card. Both require you to spend $800 minimum per month before you get those published cashback rates (6% la, 8% la etc). Worse still, it is on specific categories. Isn’t this forcing the cardholder to spend more? Miles cards are generally more generous in this sense. I may only spend $100 this month. But I am still awarded my points and/or miles. They don’t care how much you spend. As long as you spend, you are awarded with miles and/or points.
It doesn’t matter which camp you are in. Cashback or miles. Both camps work damn hard to maximise their spend so they get the best return. So, since you already need to do homework liao, why not spend the time to do homework that gives you a better return?
20K per year is rather decent, to be honest.
I paint a very simplistic scenario. Let’s say for every spend you make, you earn 3 miles per dollar (mpd). 3x20K is 60K. According to SQ award chart, you just need 61k to redeem a return business class ticket to Taiwan. Of course, you have to pay a bit of taxes but it is within $100. A return ticket on SQ business class cost you around $2k.
if you channel the $20K spend to a cashback card, at 5% cashback (average la), you will get back around $1K. Woohoo! Enough to get you a return ticket on SQ to Taiwan. But economy. And as I mentioned earlier, you have to make sure the spend is on the correct categories before you get the published cashback.
See, the same amount of spend, same homework needs to be done when it comes to optimising credit card spend but the end result is miles chaser get to enjoy champagne and complain about the stiffness of the lie flat bed whole cashback chaser rough it out in the economy.
Disclaimer: I am assuming a lot of things for a very simple scenario for illustration purpose and I might be wrong. Serious cashback chaser may even outdo me, so do take it with a pinch of salt.
12 Sep 2019