‘Tis The Season For Credit Cards

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The idea of incurring debt is one of an unpleasant nature; but in this time and age, it’s hard to imagine someone having wads of cash ready at hand for all their retailing needs – especially with readily available credit cards offering security, convenience, and the incentive to spend.

Even for the most frugal and money-conscious of us, spending money is often more of a need than a want; and with the holiday season upon us, even more so.

It is apparent that we are doomed to a life of expenses but for those shopping for a loved one this Christmas, here’s how spending with the help of credit cards can get the most bang for your buck:

I am spending money, I want something in return:

Nothing grasps the concept of giving (or giving back) the way a cash back or rewards credit card does. Like their names imply, these cards either reward you with cash returns (either by way of monthly deduction of your bill or discount on your next purchase) or points which can be redeemed for cash vouchers, gadgets, and more; it’s a rewarding experience, but not without its caveat.

Cash back or rewards cards often carry a higher interest rate compared to regular no-frills credit cards and as such should only be used if you intend to fully settle the balance every month. Those who cannot or do not intend to do so fall under the next category of credit card users and thus should consider the basic credit cards instead.

I can’t avoid expenses but that doesn’t mean I don’t want to minimise them:

Enter low interest rate cards. These cards let you stretch out payments at a lower interest charge per month. Stretching out your payments should not be confused for late or missed payments however, as lower rates only apply if you make prompt minimum payments every month.

While these cards usually do not have a cash back or rewards programme attached to them, some have begun to offer these in addition to a low interest rate as a result of stiff competition between card providers. A clear winner for a card of such benefits is Maybank 2 Cards rewarding cardholders with 5% cash back for weekend dining and 5x TREATpoints on the American Express card, as well as a low interest rate of 8.88% per annum.

I shop at one place regularly and want to be rewarded for that:

Cash back, rewards, and low interest credit cards are great but they cater to an often wide and ambiguous set of needs. If you fall under the category of people who does all their shopping at one retail outlet most of the time, a co-branded card might just be the right card for you.

A co-branded card work much like a cash back or rewards point card but rewards the cardholder with more points or larger cash back percentage for spending at a particular store. Store discounts and privileges are also common with co-branded cards.

An example of a co-branded card that offers cash back as well as reward points would be RHB’s Tesco Card; offering 5% cash back at all Tesco outlets and one reward point for retail spending elsewhere.