4 Mar - 4 min read
Chong Wei and Lin Dan have one of the most epic rivalries in badminton history. World Number 1 vs. Olympic Champion. Is there a real “winner” between these two? Nobody can really tell, and that is how the RinggitPlus.com team feels about credit card cash back and rewards points.
We recently took a good look at both areas (Fight Rising Prices with The Best Cash Back Credit Cards and What’s The Point of Reward Points) so we thought it was about time to figure out how they compared.
The best cash back credit cards in the market are currently offering around 5% rebates. So every RM1 you spend you could earn back up to 5 cents. It might not seem like much but it can add up to RM50 a month and RM600 a year.
When it comes to rewards points, most credit cards only give 1 point for every RM1 you spend. So what is a single reward point worth? Our research showed us that, in most cases, 1 reward point is worth around 0.5 cents.
In order to earn RM50 of rebates via the best cash back credit cards you would need to spend RM1,000. However, if you wanted to earn RM50 of rebates from your rewards points you would have to spend RM10,000!
If cash back is worth 10x more than rewards is the competition over already? Absolutely not.
There are two reasons why cash back credit cards haven’t smashed the rewards point’s hopes just yet.
Firstly, most of the cash back credit cards that offer attractive 5% rebates also cap the maximum you can earn to RM50 to RM100 per month. This means you are only earning the cash back rebate on the first RM1,000 or RM2,000 you spend. If your monthly credit card bills are higher than this then you are unlikely to earn very much on the additional spending.
Secondly, not all credit cards give you 1 reward point for every RM1 you spend, some give you many more. Maybank has a number of credit cards (such as the Maybankard 2 Gold Card) that offer 5 x Treatspoints for every RM1 you spend. In this case each RM1 you spend will earn you up to 2.5 cents worth of points.
So if you are using the Maybankard 2 Gold Card, you only need to spend RM2,000 to earn rebates worth RM50 from your rewards points.
Wait, we know what you’re thinking, “I have to spend twice as much on the Maybankard 2 Gold Card to earn RM50 as I do on other cash back cards!”. You’re absolutely right. Is this game, set and match to cash back? Not quite, and here’s why.
If you usually spend around RM1,000 to RM2,000 a month on your credit card then a 5% cash back card would be best for you. The OCBC Titanium would reward you with RM50 of cash back every month.
However, if your monthly credit card bills run to RM3,000 – RM5,000 then you should really think about switching to the Maybankard 2 Gold Card. In this case the OCBC Titanium would only earn back RM50 of cash back whereas the Maybankard 2 Gold Card would earn you RM60 to RM100 worth of Treatspoints.
This is the big advantage of rewards points – banks don’t cap the maximum amount you can earn. No matter how much you spend you will still be given rewards points. If you spend RM10,000, you will earn RM200 worth of points
So who’s the winner in this epic battle? 5% cash back or 5x Treatspoints? It really depends on how you use your credit card.
If you are a light spender with RM1,000 to RM2,000 a month, then a cash back credit card will give you more for your money. But if you’re addicted to your plastic and charging RM5,000 or RM10,000 a month you are better served by the Maybankard 2 Gold Card.
Just like Lin Dan and Chong Wei, there’s no real winner.
PS: The Maybankard 2 Gold Card also offers 5% cash back on weekend spending. Find out more in Fight Rising Prices with The Best Cash Back Credit Cards.