Why cashback cards are better than miles cards for Singapore travellers

It could yield as much as 30% in rewards.

For an average Singaporean spending around S$2,000 on their credit card per month, the best cashback credit cards in Singapore yield 30% more in rewards than the best miles credit cards.

According to a ValuePenguin study, for an air miles credit card to be better than cash back card, a consumer has to either spend more than S$8,000 per year on travel, or redeem miles for business class tickets or long-haul tickets only.

"Singaporean travelers who spend less than S$8,000 per year on travel expenses would earn higher overall rewards with a cash-back card than a miles credit card," ValuePenguin said.

Since an average household spends about S$2,000 per year on travelling, this is generally true for most people in Singapore.

$150 was geared towards travel bookings and overseas spending, translating to about S$1,800 of annual travel spending.

As a result, the best cashback credit cards yielded about 30% more value than the best air miles credit cards in Singapore.

"This is because travel spending only represents about 3% of an average household's expenditures, compared to 16% for dining, 9% for groceries, or 17% for transportation. Since cashback credit cards reward higher rates for these categories than miles credit cards do, cash rebate cards generally end up being more rewarding for an average consumer."

However, using miles credit cards also have its own benefit.

Those with travel insurance could save up by getting a card that includes it, or get additional luxury services, which helps save $40-50 per visit.

If you take 2 trips per year and enjoy these benefits for free each time, you could be easily saving S$500 that you would've needed to spend to enjoy them otherwise.

Here's more from ValuePenguin:

Also, frequent travellers could do very well with an air miles card, especially if they spend a lot of travel needs. A study conducted by Visa found that the average traveling household in Singapore spends about S$20,000 on travel per year.

While this average is likely quite skewed, it does reflect how there are some Singaporeans who do spend heavily on travelling: the average annual spend on overseas travel per Singaporean household is almost 6x higher than the Asia Pacific household average. For these people, an air miles card can definitely be more valuable than a cash back card.

This is especially the case if they travel frequently on business class or on long haul flights.

While ValuePenguin's study generally assumes the value of 1 Krisflyer mile at S$0.01, we also found that a mile can be worth 2-4x higher if you redeem it for long haul flights or for business class tickets, which could increase the value of an air miles card significantly higher compared to that of a cashback card.