4 simple steps to choose your first credit card!

For a summary of how I apply these considerations, check out my credit card strategy

1️⃣ HOW MUCH TIME AND EFFORT DO YOU WANT TO SPEND?

If you are a LOW EFFORT kinda person then go for general cards. Although the rewards are lower, they give consistent 1.2mpd/1.6% cashback for most spend (you don’t have to bother with MCC). Of course, the normal exclusions such as insurance or donation payment applies.

Furthermore, these cards often have no minimum spend or cap on rewards. Buying a $10k item, that’s 1200mpd or $160 to offset your next bill. Often times, there is no expiry for miles as well.

In conclusion, these cards are the most suitable for someone who wants to earn rewards while using the card but does not have much time to track their rewards.

If you are a HIGH (more) EFFORT kinda person then go for specialized cards. As the name suggests, these cards will only grant you extra rewards provided you adhere to certain conditions. For example, only online spend will give you extra points or only spending on dining category etc.

Going through the hoops help you earn much higher reward rate of 4mpd/18% cashback. However, caps on rewards are common and the bonus categories and hoops change from time to time.

In conclusion, these cards are most suited for those that are willing to track and look out for each and every expense so that rewards can be maximized.

2️⃣ WHAT TYPE OF REWARDS DO YOU WANT?

Even between specialized and general spending cards, you can still choose the type of rewards you want. For starters, the main rewards are miles, cashback and points.

For general spending cards, you mainly get to choose between miles and cashback. For those who want a low effort strategy, the best would be to go with cashback as it simply helps to offset your following month bill.

For specialized cards, most generally earn you points which give you the flexibility to convert to cashback (to offset bill), miles or to redeem vouchers. Occasionally, banks might run promotions on rewards which allows you to exchange a lower amount of points for vouchers, giving you even better value! 🤩

3️⃣ HOW MUCH DO YOU SPEND IN A MONTH?

This post details when it is one too many credit card.

Now this is very important and applies to every other card following that as well‼️Credit cards are here to help improve your quality of life, not make it worse. You should always strive to spend within your means. If you feel stressed about having to spend more, then do opt for cards without minimum spend.

In general, most specialized cards have a monthly cap of $1-2k in terms of bonus points without any minimum spend. Any eligible spend after that will not accrue bonus points. For me, these are the perfect type of cards at my current life stage 🤗

4️⃣ SIGN UP GIFTS/BONUSES

These days, signing up for credit cards via Singsaver or Moneysmart is the best. Time to time, these 3rd party websites will throw in extra sign-up gifts/bonuses and even lucky draws (some flash deals have really insane gift🤑). Even without extra rewards, sign up bonuses for some cards such as the UOB Prvi is pretty solid as long as you fulfill the criteria.

I would definitely steer clear of signing up for a card at a roadshow. If you are a new to bank customer, the general rule is never to sign up for a card without a sign up bonus.

#MyLemon8Diary #personalfinance #Adulting101 #creditcards