Myth of Credit Card Cash Rebate

I have been holding cash rebate credit card since 2008.  If you follow my blog closely, you should understand that I treat credit card as cash and cash rebate as a discount.  I believe it is essential for us to do so especially in the regime of high living cost we are experiencing now.

 

A cash rebate credit card from Bank C has been giving me very good cash rebate as follow:

 

1. 5% on petrol
2. 2% on groceries from hypermarkets and handphone bills
3. 0.3% on other spendings

 

My record shows that my annual spending on Bank C's credit card is about $37,000 and Bank it gives me a rebate amount of about $323 annually.  If I consider the payment of annual government tax of $50 for principal card and $25 for supplementary card, the actual net rebate receive shall be $248.

 

Recently, a sales representative of Bank O came to me to promote her Bank's credit card with 1% rebate for all spending.  I quite hesitate to listen to her as I thought that 1% rebate can't beat the 2% and 5% rebate that I had been enjoying from Bank C.  However, she told me that 1% rebate for all spending is really not a bad option after all and sincerely asking me to consider.

 

After returning home, I took out my pass two years' credit card statements and only realized that my so-called high cash rebate card from Bank C had been giving me only about 0.8% to 0.9% cash rebate in average.  After looking into further, I understand that my petrol, groceries and handphone spending were at 10%, 5% and 2% of my total annual spending respectively.  In other words, 83% of my annual spending were getting the lowest rebate.  If I further offset my payment of government tax of $75, the rebate further reduce to 0.6% to 0.7%.  Wow, it is really caught me in surprise.

 

When reviewing Bank O's offer, the bank able to provide rebate on my payment of government tax should my spending meet their minimum requirement and this rebate on top of the 1% cash rebate.

 

So, when shop for credit card, keep your mind open and do your analysis before rejecting anything.  Don't look at the benefit from the surface as actual facts will surprise you if you dig into it further.