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Saturday, November 24, 2012

Optimizing on my Credit Cards

I previously reviewed the different credit cards that are available in Malaysia and ways to get money back from these cards. A lot has changed since my last review. I have not really gone back to do an in depth analysis. The baseline at the moment for value based on either cash back or prize redemption is 0.5%. The service tax by the Malaysian government adds an additional RM50 per principal card and RM25 per supplementary card.each year.


Money
image © Adrian van Leen for openphoto.net CC:PublicDomain 

Due to the competition in the market, most annual fees are waived. The only exception I found is the Citibank Cashback card. When you first sign up for the card, the annual fee for the first two years are waived. However, when I asked for a waiver, they refused. Instead of approving a waiver, they offered a different card. The other option from them was to sign up for an additional service from them for another year waiver. I refused either option and was billed RM625. I cancelled the card since that fee was much more than the amount of cash back I could earn in a year.


The most generous card in the market now is the OCBC Titanium Mastercard. With the card you get five percent cash back on petrol, dining, groceries, utility bills. For any other items that do not fall within the five percent cash back category, you get one percent cash back instead. This is even higher than the cash back from Citibank cash back card. As an additional incentive to use the card, if you spend more than RM10000 per year, you will be given a bonus of RM50 to offset the government service tax. However, be aware of some restrictions.
  1. Some grocery stores are not included in the five percent cash back. You will enjoy the five percent cash back only when you shop in supermarkets like Tesco, Giant, Sunshine and Carrefour enjoy the five person . Strangely enough, Jaya Jusco is not included.
  2. The maximum cash back you can enjoy per month is RM50. This applies for both principle and supplement expenses (so there is no reason to get a supplementary card).
  3. To get an annual fee waiver, it is necessary to use the card at least 12 times a year.


Another great card to optimize my expense is the UOB OneCard. This card duplicates.the cash back rates offered by Citibank Cashback Card and added GSC cinema to the list. This card is to gain extra cash back when I fill up my car (petrol expenses) and for watching movies in the cinema. If I use this card in BHP stations, I will get five percent cash back, additional one percent UOB$ (which I can redeem in GSC cinema) and also points from BHP eCard. 550 ePoints redeems RM5 of petrol. This brings a total rebate of seven percent. As for movies, I will get five percent cash back and another five percent UOB$. With the UOB$ I accumulated, I get to watch some movies for free. However, there are certain conditions that you should watch out for.

  1. To get the annual fee waiver for the card as a principle card holder, you need to use the card at least 60 times a year.
  2. The annual fee for a supplementary card is RM30 which cannot be waived.
  3. The petrol purchases that qualify for cashback limited to RM600 per month (means you can only get a maximum of RM30 rebate for petrol).

If you want to provide supplementary card to your loved ones, AmBank Carz card is the way to go. You can get up to three supplementary cards without annual fee. Unfortunately, the government tax cannot be avoided. The Carz card offers one percent cash back on petrol expenses, everything else follow our baseline of 0.5% (either to offset the tax or redeem for cash but only when you reach 30000 points).

Two things that is necessary for this plan to work.

  1. The credit card bills are paid in full each month so that late fees will not affect the value of the cash back.
  2. No additional purchases are made because of the credit card.

In optimizing on cash back, I lose out on things like

  1. exclusive discount offers that are frequently available for Citibank and HSBC.
  2. exclusive items that can be found in the card catalogs which are not available elsewhere.

This option is available in Malaysia. I wonder how it works in other countries. Feel free to share by commenting below.
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