Beginner's guide
Understanding Cashback and Rewards: How They Actually Work
TL;DR: Cashback, points, and miles look similar on marketing materials but deliver very different returns depending on how you spend. This guide explains each currency, how to value them, and which is right for your lifestyle.
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The Three Reward Currencies
When you apply for a rewards credit card in Singapore, your spending earns in one of three currencies: cashback (a percentage returned as a statement credit or cash), points (proprietary bank or network points), or miles (airline miles or hotel loyalty points). These are not equivalent, and the currency that delivers the best return depends on how you spend, how much complexity you want to manage, and what your end-use for the reward is.
How Cashback Percentage Is Calculated
Cashback is the simplest of the three currencies. A 5% cashback card on a SGD 100 grocery purchase credits SGD 5 to your account. The key variables to understand are: (1) the cashback rate for each merchant category, (2) any monthly earn cap, (3) the minimum monthly spend required to unlock the headline rate, and (4) any categories excluded from earning.
Singapore cards frequently use a tiered-minimum-spend model: if you spend at least SGD 500–800 per month, you unlock the headline cashback rate across all categories. Below that threshold, you earn a lower base rate of 0.3–1% on all spending regardless of category. This structure rewards high-spending households and penalises low-volume users. Calculate whether your average monthly card spend comfortably clears the minimum before applying for a high-rate tiered card.
Earn caps are common on Singapore cashback cards. A card advertising 8% on dining with a SGD 25 monthly cap earns 8% only until your dining spend reaches SGD 312 in that month (SGD 25 ÷ 8% = SGD 312). Beyond that point, all further dining spend earns the base rate. If you spend SGD 800 per month on dining, the SGD 25 cap makes the effective earn rate much lower than the headline 8%.
How Points Are Valued
Bank points in Singapore—DBS Points, OCBC$, UOB Points, Standard Chartered 360° Rewards Points—are worth a fixed amount when redeemed for cash, typically SGD 0.004–0.005 per point (0.4–0.5 cents). This is the baseline. Points are often worth more when redeemed for miles at the ratio advertised by the bank, typically 2.5–3 points per air mile (Krisflyer, Asia Miles). One Krisflyer mile redeemed for an economy redemption has an effective value of SGD 0.01–0.02; in business class it can reach SGD 0.04–0.07 per mile. The variability in mile value is why miles programmes appeal primarily to frequent business travellers rather than casual flyers.
How Miles Programmes Work in Singapore
Singapore Airlines' KrisFlyer and Cathay Pacific's Asia Miles are the two most common airline loyalty currencies earned on Singapore credit cards. DBS, OCBC, UOB, Citibank, and Standard Chartered all offer one or more cards that convert bank points or spend directly into KrisFlyer miles, typically at a rate of SGD 1 = 1–2 KrisFlyer miles. Premium sign-up bonuses (commonly 10,000–50,000 miles in the first three months) make new-card offers particularly valuable for travellers who can organically clear the spending requirement.
Miles redemptions require planning: seats are released six to eleven months in advance for peak dates, partner airline redemptions add complexity, and fuel surcharges significantly affect the net value of a redemption. For Singapore-based consumers who fly internationally two or more times per year, a miles card can outperform a cashback card in total value—but only if the miles are actually redeemed, and redeemed well.
Comparing the Three Currencies
For consumers who want simplicity and reliability, cashback is the best default. You always know exactly what you have earned, it never expires (or expires on a long horizon), and it requires zero post-redemption effort. For consumers who spend more than SGD 3,000–5,000 per month on a card, a miles card targeting premium international travel redemptions often delivers the highest theoretical value per dollar spent—but requires planning and flexibility in travel dates.
Points cards sit in the middle: they offer flexibility to convert to either cashback or miles depending on which is more valuable at redemption time, but intermediate conversion steps mean there are more points at which value can be lost.
Practical Tips for Singapore Cardholders
Confirm the minimum monthly spend requirement for the headline cashback rate before applying. If you do not consistently clear that minimum, the effective earn rate is far lower than advertised. Check whether the card has a foreign currency fee (typically 1.8–2.5% in Singapore) if you regularly shop on international sites—this can wipe out cashback earnings on overseas transactions. Use a reward portal (Kris+, DBS Rewards, OCBC Rewards) rather than redeeming points at in-branch kiosks, where values are sometimes lower. Finally, note point expiry dates: most Singapore bank points expire after two to three years and are forfeited if unused. Set a calendar reminder to redeem before expiry.
Choosing the Right Currency for Your Lifestyle
The clearest decision rule: if you travel internationally in business or first class at least once a year and can plan redemptions six to twelve months ahead, a miles card will likely outperform cashback in total annual value. If you travel economy, infrequently, or prefer simplicity, cashback is the better default. Points cards work well as a hedge if you are undecided—they give you the option to convert to either cashback or miles, though at a small cost in conversion efficiency compared with a dedicated card in either category.