Credit cards offer many benefits if they are used wisely, including rewards, cash back, discounts and other perks on top of their main feature of buy now, pay within a month. The key is not to spend more than you have, because the interest rates on debt are steep.
Every baht spent on restaurants, retail, shopping, insurance premiums and petrol can earn card holders reward points, which can be transferred to airline miles. Travel lovers would be wise to plan their spending to save up for future trips.
Credit card points can often be converted into frequent flyer miles, allowing card holders to reach free air tickets quicker than if the frequent flyer member was only flying. Another option for credit card points is free upgrades to business class or a reduction in fares.
But don't fall into the trap of buying more than normal just to take advantage of perks or frequent flyer miles, as the interest charges more than offset the value of any rewards.
Tips for best use
Yuttachai Teyarachakul, managing director and country head of personal financial services at UOB Thai, recommends some tips to make the best use of credit cards:
- Earn rewards that suit your lifestyle.
If you are a frequent traveller, consider using a credit card which can use fewer reward points than other cards in redeeming for flight tickets or discounted travel.
- Take advantage of a 0% instalment plan.
Such a plan enables card holders to pay over a number of months, making the cost easier to bear.
- Analyse your spending.
The card that works best for your friend may not be the right match for you if your spending habits are different. It's important to know the kinds of purchases you make, the amount you spend and the frequency. Credit cards vary widely based on perks offered for different types of spending.
- Be responsible.
Credit cards, when used appropriately, can help make the most of your spending. However, having a credit card does not equate to extra spending money. If you are not disciplined in paying off your credit card balance every month, over time the combination of interest and principal debt will increase, possibly leading to financial stress.
Spend within your means and pay your credit card bills in full every month, Mr Yuttachai said. This requires discipline but will save you plenty over the long term and improve your credit score, he said.
Top travel rewards cards
Most rewards credit cards in the local market offer transferable points to frequent flyer miles of the national carrier Thai Airways International, Bangkok Airways and budget carrier AirAsia.
According to data compiled by the Bangkok Post, the SCB My Travel credit card helps holders rack up frequent flyer miles the fastest on the three airlines.
For every 20 baht spent, SCB My Travel cardholders earn two reward points, while 1,700 reward points can be transferred for 1,000 miles on Thai Airways' Royal Orchid Plus (ROP), translating to 17 baht for one mile.
SCB My Travel holders can opt to redeem 1,500 reward points for 1,000 AirAsia Big Points, where one point is granted for every 15 baht spent, while 2,000 reward points can be redeemed for 1,000 Bangkok Airways flyer bonus points, at a cost of 20 baht per point.
The card's other benefits include a favourable foreign currency exchange rate, and discounts for accommodation, car rental and air tickets. Cardholders are subject to free overseas health and travel insurance coverage when they buy air tickets with the card.
Some credit cards offer free overseas health and travel insurance coverage when buying air tickets with the card. (Photo by Pattanapong Hirunard)
SCB My Travel requires a 3,000-baht annual fee for the first year, though it is waived if the cardholder's cumulative spending with the card amounts to at least 300,000 baht during the year.
To qualify for SCB My Travel, applicants must earn income of at least 50,000 baht a month.
UOB Privi Miles offers flexible redemption points for tickets from several airlines, including Thai Airways, Singapore Airlines and Cathay Pacific.
For ROP members, the UOB Privi Miles card offers one of the best point value systems, with a redemption rate of 1.2 reward points per mile. A reward point is issued for every 15 baht spent, making one ROP mile worth 18 baht for card holders.
Privi Miles holders who fly with Thai Airways are offered free access two times a year to the Royal Silk Lounge at Suvarnabhumi airport when they have cumulative spending of 100,000 baht or above per quarter, and limousine service to the airport up to four times a year when cumulative spending reaches 200,000 baht per quarter.
The card also provides travel accident insurance coverage of up to 20 million baht to card holders and their family members when the card is used to pay for full travel fares.
The Privi Miles card requires a minimum monthly income of 70,000 baht and carries an annual fee of 4,000 baht that is waived for the first year. The annual fee exemption is extended for subsequent years if spending reaches the card issuer's required quota.
Citi Royal Orchid Plus Preferred offers one Citi Reward point for every 15 baht spent on dining, travel and foreign currency, which can be converted to 1 ROP mile. For every other category, spending of 20 baht earns one Citi Reward point. It also offers 25,000 bonus reward points for card holders who spend 1 million baht via the card in one membership year.
Other travel benefits include unlimited Royal Silk Lounge access at Suvarnabhumi when flying with Thai Airways, plus complimentary limousine service from home to the airport two times per calendar year for distances up to 50 kilometres, with a 50% discount for the next two uses in the same calendar year.
But the card charges an annual fee of 5,000 baht for the first year and 10,000 baht for the following years. The fee from the second year can be exempted if spending hits the card issuer's requirement.
The Citi Royal Orchid Plus Select and Aeon Royal Orchid Plus Platinum are two more choices offering one reward point for every 20 baht spent and a one-for-one redemption rate into ROP miles.